State Ffa Farm Management 2009

STATE FFA FARM MANAGEMENT 2009

PART I

Work individually to answer the following multiple choice questions. Mark your answers on your grademaster answer card #25420. Make dark marks with a number 2 lead pencil, erase completely to change.

1. A farmer that has a debt to asset ratio of more than 100% will not be able to make all the scheduled payments on debt.

A. True B. False

2. A farm with a capital replacement margin of $20,000 ( cash basis) should be able to buy a $10,000 piece of equipment without borrowing any money.

A. True B. False

3. A crop produces $200 of gross income and produces 50 bushels per acre. The total cost per bushel is $3.90. What is the net income per acre?

A. $4.00 B. $5.00 C. $ .10 D. none of the above.

4. The high profit farms in Western ND in 2008 had a operating exp ratio of 67%, a depreciation expense ratio of 5%, and An interest expense ratio of 6% . What was their net farm income ratio?

A. 22% B. 33% C. None of above

5. 160 acres of pasture is rented for $15 per acre. 20 cows with calves can be maintained for 5 months on this pasture. What is the cost per AUM?

A. $ 12.00 B. $ 3.75 C. $24.00 D. $ 8.00

6. In the above situation, what is the yield per acre in AUMs?

A. 1.25 aums/acre B. 625 aums /acre

C. 1.6 aums/acre D. Cannot be calculated with given information

7. In a particular county in western ND it is said that the average pasture yield is .4 AUMs per acre . Given this information would it be less expensive to pay $10/ acre or $ 20 per AUM?

A. less expensive to pay $ 10/acre B. Less expensive to pay $ 20 /aum.

C. none of the above, they are the same

8. The non farm income appears on the

A. balance sheet ( in non farm assets category) B. farm income statement

C. Statement of Cash Flow D. None of the above

9. Which of the following is not true about the basis?

A. Basis is computed as futures minus cash.

B. A strengthening basis means; becoming more positive.

C. Basis reflects transportation costs.

D. A positive basis indicates that cash price is higher than futures price.

10. Which of the following is an acronym for the federally backed crop insurance program that covers losses from various causes?

A. MPCI B. FCI C. HALE D. ICC

11. Which of the following items will give you the best indication of the actual production in a beef cowherd?

A. Feed cost per cow. B. Pounds weaned per exposed female.

C. Pregnancy percentage. D. Average weaning weight per calf.

12. Machinery, new storage capacity and land ownership are all examples of which type of input cost

A. Direct costs B. Fixed costs C. Variable costs D. None of these

13.______is the daily accumulation of interest on a loan.

A. Cruel interest B. Interest buy down C. Annual interest D. Accrued interest

14. Calculate the interest indicated in question #13 as of 12-31-08 on a loan balance of $150,000. The interest rate is 6% and the last full payment was on October 1, 2008.

A. $ 150 B. $3510 C. $ 683 D. $2244

15. Farmer John Smith grows durum and needs to apply 80 lbs. of actual nitrogen in order to reach his yield goal of 40 bushels per acre. How many lbs. of NH3 would he need to apply per acre?

A. 80.75 lbs. B. 120.43 lbs. C. 160.53 lbs. D. 97.56 lbs.

16. In question # 15 how much will it cost per acre if NH3 is selling for $600 per ton?

A. $48.12/acre B. $36.60/acre C. $24.34/acre D. $29.27/acre

17. What will his total cost be to fertilize 1000 acres with NH3?

A. $48,124 B. $36,599 C. $24,344 D. $29,270

18. Rancher Betty Spine has a herd of 200 Angus cows. 190 of her cows gave birth during 2008. What is her calving %?

A. 93% B. 89% C. 97% D. 95%

19. In question #18 Betty weaned 185 calves at 550 lbs. per calf. What is her weaning wt. per exposed female?

A. 509 lbs B. 525 lbs C. 550 lbs. D. 535 lbs.

20. The amount of gross production per dollar of investment is known as:

A. Rate of return on assets. B. Operating profit margin

C. Asset turnover rate. C. Labor and management earnings.

21. If two commodities are substitutes for each other, an increase in the price of one will:

A. Decrease the demand for the other. B. Increase the demand for the other.

C. Decrease the price of the other. D. Increase its demand.

22. Net farm income minus the interest on farm net worth is known as:

A. Rate of return on assets. B. Operating profit margin.

C. Rate of return on equity C. Return to labor and management.

23. A farm business may cash flow without being profitable.

A. True B. False

24. On a farm balance sheet, an IRA would be listed as:

A. Intermediate asset B. Non farm asset C. Current asset D. Long term asset

25. A Farmer has a long-term loan with a fixed interest rate and equal amortized annual payments. With each annual payment the farmer makes the amount of principal each installment would normally:

A. Decrease B. Increase C. Remain the same D. None of the above

26. An operating loan normally has a ten-year repayment schedule.

A. True B. False

27. A Contract for Deed is a tool normally used by banks and other lending institutions to finance the purchase of breeding livestock.

A. True B. False

28. Which of the following is a cash farm expense?

A. The cost of diesel fuel paid by check at time of delivery.

B. The cost of a dependent’s dental work, which was paid using $20.00 bills.

C. Machinery depreciation.

D. Loan principle paid by check

29. The worldwide inventory of wheat available for sale has no effect on the market price of wheat.

A. True B. False

30. When using an accrual accounting system…

A. A crop is considered income when it is harvested

B. Fertilizer is considered an expense when it is put into the soil

C. Vaccine is considered an expense when injected into a calf

D. All of the above

31. Which of the following choices contains only intermediate assets?

A. Check for cows sold, corn silage, corrals

B. Loan to buy tractor, Ford pickup, grain bins

C. Feeder wagon, fertilizer, herd bull

D. Bred cows, New Holland baler, computer

32. 0.93 is considered a better current ratio than 2.14.

A. True B. False

33. Which of the following is considered the best debt to asset ratio?

A. 36% B. 51% C. 22% D. 64%

34. Which of the following contains only direct expenses to a farmer/rancher?

A. Corn seed planted, anhydrous ammonia fertilizer applied, land rent paid

B. Fed alfalfa hay, blue ear tags, bloat medicine

C. Five gallons of Roundup, custom combining hired, crop insurance expense

D. All of the above

For questions 35 – 38 - When farmers sell grains, at what weight are they sold at?

35. Wheat

A. 30 lbs. B. 48 lbs. C. 50 lbs. D. 60 lbs.

36. Barley

A. 30 lbs. B. 48 lbs. C. 50 lbs. D. 60 lbs.

37. Field Peas

A. 30 lbs. B. 48 lbs. C. 50 lbs. D. 60 lbs.

38. Sunflowers

A. 40 lbs. per bu. B. per cwt. C. Metric ton D. B & C

39. A farmer is not able to pay back all of his 2007 operating loan with income from 2007. Most lenders don’t like to carry old short-term debt into 2008 for payment with 2008 income. What is his best option?

A. Beg the banker to write it off.

B. Add 2007 debt to the 2008 operating loan.

C. Transfer short-term credit to intermediate and long-term loans, if there is adequate equity left in the collateral.

D. Use credit cards to pay off 2007 operating loan.

40. The 2007 grain growing season in North Dakota turned out to be one of the best profit years that most farmers have ever had. What is the main reason?

A. Abundant rain B. High crop yields C. High prices D. Hot, dry summer

41. If a farm family spends $54,000 for family living and income tax. How much do they need to make on every acre they grow crops on if they crop 2000 acres?

A. $20/acre B. $24.55/acre C. $27/acre D. $40/acre

42. If a farm family spends $60,000 for family living and nets $46,700 from the farm,

what is the minimum amount of take home pay that they would need to earn from off

farm income?

A. $36,800 B. $13,300 C. $60,000 D. $54,700

43. NH3 has the following % of actual nitrogen?

A. 82% B. 52% C. 73% D. 100%

44. What crop is bio diesel made from in North Dakota?

A. HRSW B. Corn C. Canola D. Flax

45. Prices are driven by supply and demand. If supply is low prices will tend to be?

A. High B. Low C. Same D. A.& B.& C.

46. In the futures market the “market carry” would normally cover which of the following?

A. Freight and handling B. Storage and interest costs

C. Commissions and freight D. Trucking costs only

46. In a hedge to arrive contract which of the following is true?

A. The producer is obligated to deliver the commodity to the buyer

B. The basis is fixed at a given price

C. No commission or fees are allowed on interstate transactions

D, Profits improve if the related futures price increases

47. The minimum amount of money that a broker can allow a producer to have with an on-going futures transaction is called what?

A. Account balance

B. Initial margin

C. Commodity transaction fee minimum or CTFM

D. Maintenance margin

48. What is the effect of lowering the total value of the operator’s labor and management charge in the analysis?

A. Raises the interest costs per acre

B. Lowers the direct costs per acre

C. Raises the value of the total farm production

D. Raises the rate of return on equity

E. None of the above

49. If the basis in a potential wheat sale is becoming increasingly negative by the day what action might a producer wish to take in regards to the futures market?

A. Plant less wheat

B. Do a basis contract with a local elevator

C. Do a hedge to arrive contract and leave the basis open

D. See what the other producers are doing

50. The disaster portion of the 2008 Farm Bill is called:

A. ACRE B. SURE

C. DISASTER D. There is no such portion to cover disaster.

2009 STATE FFA FARM BUSINESS MANAGEMENT TEST

PART 2

(FINPACK Balance Sheets found in the resource information)

Please use the Market Value when making the calculations for the Anderson Farm. Also round the number to the nearest hundredth.

1/1/2007 / 1/1/2008 / 1/1/2009
Current Ratio / 0.63 / 2.54 / 1.70
Ownership Equity / 0.56 / 0.75 / 0.77
Leverage Ratio / 0.75 / 0.32 / 0.31
Current Debt Ratio / 0.40 / 0.30 / 0.35
Debt to Asset Ratio / 0.43 / 0.24 / 0.23

Financial Statements

1. The change in Net Worth from 1/1/2008 to 1/1/2009 was:

A. $54,801 B. $47,022 C. $1,061,570 D.$5,546

2. The ratio that is the weakest on 01/01/09 is the:

A. Current Ratio B. Current Debt Ratio

C. Leverage Ratio D. Debt to Asset Ratio

3. On which date was the Anderson’s current ratio the strongest?

A. 1/1/2007 B. 1/1/2008 C. 1/1/2009

4. The factor that most likely contributed to Joel Andersons drop in Net Worth from 1/1/2008 to 1/1/2009 was:

A. Increase in Current Assets B. Decrease in Current Debt

C. Decrease in Intermediate Debt D. Decrease in Current Assets

5. The Anderson Farm balance sheet leverage ratios from 2007 to 2009 implies that the farm has accepted:

A. Less financial risk B. More financial risk

C. Has been profitable D. None of the above

6. Which Ratio has been the steadiest on Joel Andersons Farm?

A. Current Ratio B. Current Debt Ratio

C. Leverage Ratio D. Ownership Equity Ratio

7. The Ownership Equity Ratio in the year it was the weakest would be considered:

A. Strong B. Satisfactory C. Vulnerable

8. The current ratio in the year that it was the weakest would be considered.

a. Strong B. Satisfactory C. Vulnerable

9. The 1/1/2009 Current Ratio would be considered:

A. Strong B. Satisfactory C. Vulnerable

10. The ratios from 1/1/2008 to 1/1/2009:

A. remained relatively strong

B. show the farm has taken on a vulnerable position

C. changed drastically

D. none of the above

11. The change in the leverage ratio from 1/1/2007 to 1/1/2009 shows that Joel Anderson has:

A. Bought more Machinery B. Taken on more debt

C. Took a long vacation D. Paid down a considerable amount of debt

12. The Anderson farm business ratios for 2009 indicate that they should consider:

A. Refinance some short term debt into their land

B. Look at alternative’s to increase profit

C. Everything is great, do nothing

D. Both B & C

13. Based on the Anderson’s Farm Balance Sheet for 01/01/09, the retained earnings/contributed capital is:

A. $54,801 B. $1,006,769 C. $1,061,570 D. None of the above

14. Using the information from the 40-60% Farms from the Farm Income Statement (Region 2), which group of enterprise’s contributed the most to gross cash farm income:

A. All Livestock Income B. All Crop Income

C. Custom Work Income D. Government Payments and Insurance

Projected Budget