Resume Wizard - Colorado FFA
Junior and Senior level Ag Bus. | |Colorado Agriscience Curriculum
|Section: |Advanced Agribusiness |
|Unit: |Management of Agricultural Business Records |
|Lesson Title: |Analyzing Financial Statements - Ratios |
|Colorado Ag Education | |
|Standards and Competencies |AGB11/12.03 - The student will be able to formulate and analyze financial records and use the information for evaluation and |
| |planning. |
| | |
| |Use financial measures (ratios and trends). |
| | |
|Colorado Model Content |Math Standard 1: Students develop number sense and use numbers and number relationships in problem-solving situations and |
|Standard(s): |communicate the reasoning used in solving these problems. |
| | |
| |Math Standard 2: Students use algebraic methods to explore, model, and describe patterns and functions involving numbers, |
| |shapes, data and graphs in problem-solving situations and communicate the reasoning used in solving these problems. |
| | |
| |Math Standard 3: Students use data collections and analysis, statistics, and probability in problem-solving situations and |
| |communicate the reasoning used in solving these problems. |
| | |
| |Math Standard 6: Students link concepts and procedures as they develop and use computational techniques, including estimation, |
| |mental arithmetic, paper-and-pencil, calculators, and computers, in problem-solving situations and communicate the reasoning used|
| |in solving these problems. |
|Student Learning Objectives: |The student will define ratios. |
| |The student will understand why ratios are used in agriculture and life. |
| |The student will understand the algebraic concepts of creating ratios |
| |The student will understand how to compare financial ratios to make educated decisions and improve the health of an agricultural|
| |business. |
|Time: |50 minutes |
|Resource(s): |Casey, Jobes, Purcell, and Steward (1992). Farm and Ranch Business Management. Deere and Company Service Publications Department.|
| |Moline, Illinois. |
| |Doan’s Farm Management Guide 14th edition (1980), St. Louis, Missouri |
| |Decisions and Dollars (1993) National Council for Agriculture Education |
|Instructions, Tools, |Italicized words are instructions to the teacher, normal style text is suggested script. |
|Equipment, and Supplies: |Tools, Equipment, and Supplies |
| |PowerPoint Slides |
| |Handouts |
| |Quiz / Test |
|Interest Approach: |Today we are going to explore ratios and how they are used in agribusiness. |
| | |
| |First, let us get foundation knowledge of what ratios really are! |
| |The following is a definition of a ratio. Write this down, because you will need to remember it later. |
| | |
| |Move on to slide 2 |
| | |
| |A financial ratio is simply a comparison of two measurements of a business. These two measurements are expressed in terms of a |
| |ratio or one as a percentage of another. Each ratio is designed to highlight some particular phase of the financial condition of|
| |your business |
| | |
| |Before you go to the next slide, ask the students the following question. Have them answer in a quick draw format (one students |
| |answering after another. You will need to call on students to keep the pace up) write the ratios on the board. |
| | |
| |Now that you have the definition of a ratio, come up with some ratios that you may use everyday, in sports, or in other classes. |
| |(write these on the board) |
| | |
| |Move to slide 3 |
| | |
| |Ratios are used in many aspects of everyday life and finances. |
| | |
| |Ratios are everywhere in our lives, weather it is a batting average, fuel mileage in our vehicle, or our own net worth statement.|
| | |
| |Ratios drive us to perform better, strive to be the best, and outperform the competition. |
| |The same holds true in agriculture, ratios allow us to evaluate the performance of our enterprises and make educated decisions |
| |about our enterprises. |
| |Finally, ratios allow us to make educated decisions with the assistance of our financial advisor or loan officer concerning |
| |financing. |
| | |
| |Move to slide 4 |
| | |
| |The primary function of ratios is allow agriculturalists to keep track of finances without devoting a large amount of time to |
| |study of individual records. |
| |The maximum value of ratios occurs when a producer compares specific ratios over a period of years. This is the most effective |
| |way to measure the growth of your operation. |
| | |
| |Move to slide 5 |
| | |
| |How many of you would like to be a state champion in sports, academics, or FFA? Have students show by hands. You could even |
| |promote a conversation about competitiveness at this point. How many of you would like to own, operate, or work in a business |
| |that is successful? Ratios can fuel competition between teams, players, and producers. The list on the slide shows how ratios |
| |are used to improve a business or competition between businesses |
| |Average or Benchmark ratios are established in many financial scenarios. |
| | |
| |The benchmarks may be national, state, county, local, or personal. |
| | |
| |Also, ratios can be compared between one agriculture business and another. |
| | |
| |Now, let us get into the meat and potatoes of Agriculture Ratios! |
| | |
| |Move onto slide 6 |
| | |
| |The instructor needs to prepare themselves for this part of the lesson by reviewing the following ratios and understanding how |
| |the algebraic formulas work. At the end of the Ratio slides, relate the ratios to algebraic formulas. |
| | |
| |The following are examples of specific agriculture ratios, and their descriptions. |
| | |
| |Current Ratio |
| |One of the most used of all ratios. It measures Liquidity which is the ability to repay debt. (also used on the State and |
| |American FFA Degree on page10) the instructor may choose to pull up the Stat/American FFA Degree application so that the students|
| |can see exactly where the ratio is. |
| | |
| |Move to slide 7 |
| | |
| |Example of a Current Ratio: |
| | |
| |Total Current Assets |
| |Current Ratio = ------------------------------ |
| |Total Current Liabilities |
| | |
| |$59,127 |
| |$2.15 to $1 = -------------- |
| |$27,524 |
| | |
| |In other words this operation has $2.15 of current assets to cover each $1 of current debt. |
| |On a side note, most lenders consider a current ratio of 2:1 good. On the other hand a ratio of less than 1:1 could mean that a |
| |business is in serious financial trouble. |
| | |
| |Move to slide 8 |
| | |
| |Debt-to-Equity Ratio |
| |Otherwise known as leverage, it relates total debt to net worth. It reflects the soundness of your business. (Also used on the |
| |Sate and American Degree on page 10) |
| | |
| |Move to slide 9 |
| | |
| |Example of a Debt-to-Equity Ratio: |
| | |
| |Total Liabilities |
| |Debt-to-Equity = ----------------------- |
| |Net Worth |
| | |
| |$50,000 |
| |$2 to $1 = ----------------- |
| |$25,000 |
| |In this scenario the ratio is 2:1, this means that creditors have $2 invested for every $1 the producer has put into the |
| |business. The higher the ratio, the larger the share creditors have in your operation’s assets. This could mean a greater risk |
| |of exposure to both the creditors and yourself. |
| | |
| |Move to slide 10 |
| | |
| |Profit to Gross Income Ratio |
| |This ratio relates the volume of your operation to the Profit (net income) otherwise known as “take home” income. |
| | |
| |Move to slide 11 |
| | |
| |Example of Profit to gross income ratio: |
| | |
| |Profit (net income) |
| |Profit to Gross Income = ------------------------- |
| |Gross Income |
| | |
| |$75,000 |
| |$.50 to $1 = ---------------------- |
| |$150,000 |
| |This example shows that it took $1 of gross income (the measure for volume of a business) to produce $.50 in profit (otherwise |
| |know as take-home income). |
| | |
| |So now that we have discussed specific ratios, let us use one of those ratios to show how the health of a business can improve |
| |over time and how we can use ratios to evaluate the health of that business. Move to slide 12 |
| | |
| | |
| | |
| |The following is an example of how an agriculture business’s Debt to equity Ratio improved over time. |
| | |
| |2004 2005 2006 2007 |
| |2:1 2:1.1 2:1.4 2:1.7 2:1.9 |
| | |
| |As you can see in the above example, this producers Debt to Equity Ratio or leverage improved over the five-year span. This |
| |improvement shows that the business is getting healthier. A healthier business means more profit in the long run. |
| | |
| |Move to slide 13 |
| |Read the following list to the students and encourage them to add specific agriculture ratios to this list. |
| |Bushels per acre |
| |Ears of Corn per plant |
| |Blossoms per flower |
| |Lambs per ewe |
| | |
| |Move to slide 14 to wrap it up |
| | |
| |Now let’s summarize what Ratios can do for us as agriculturalists. |
| |Assess or measure individually and relation to others |
| |Compare measures with known benchmark |
| |Calculate measures using good information |
| |Use measures to evaluate past, present, and future |
| | |
| | |
|Objective 1: |The student will define ratios. |
| |First, let us get foundation knowledge of what ratios really are! |
| |The following is a definition of a ratio. Write this down, because you will need to remember it later. |
| | |
| |Move on to slide 2 |
| | |
| |A financial ratio is simply a comparison of two measurements of a business. These two measurements are expressed in terms of a |
| |ratio or one as a percentage of another. Each ratio is designed to highlight some particular phase of the financial condition of|
| |your business |
| | |
| | |
|Objective 2: |The student will understand why ratios are used in agriculture and life |
| |Before you go to the next slide, ask the students the following question. Have them answer in a quick draw format (one students |
| |answering after another. You will need to call on students to keep the pace up) write the ratios on the board. |
| | |
| |Now that you have the definition of a ratio, come up with some ratios that you may use everyday, in sports, or in other classes. |
| |(write these on the board) |
| | |
| |Move to slide 3 |
| | |
| |Ratios are used in many aspects of everyday life and finances. |
| | |
| |Ratios are everywhere in our lives, whether it is a batting average, fuel mileage in our vehicle, or our own net worth statement.|
| | |
| |Ratios drive us to perform better, strive to be the best, and outperform the competition. |
| |The same holds true in agriculture, ratios allow us to evaluate the performance of our enterprises and make educated decisions |
| |about our enterprises. |
| |Finally, ratios allow us to make educated decisions with the assistance of our financial advisor or loan officer concerning |
| |financing. |
|Objective 3: |The student will understand the algebraic concepts of creating ratios |
| |Now, let us get into the meat and potatoes of Agriculture Ratios! |
| | |
| |Move onto slide 6 |
| | |
| |The instructor needs to prepare themselves for this part of the lesson by reviewing the following ratios and understanding how |
| |the algebraic formulas work. At the end of the Ratio slides, relate the ratios to algebraic formulas. |
| | |
| |The following are examples of specific agriculture ratios, and their descriptions. |
| | |
| |Current Ratio |
| |One of the most used of all ratios. It measures Liquidity which is the ability to repay debt. (also used on the State and |
| |American FFA Degree on page10) the instructor may choose to pull up the State/American FFA Degree application so that the |
| |students can see exactly where the ratio is. |
| | |
| |Move to slide 7 |
| | |
| |Example of a Current Ratio: |
| | |
| |Total Current Assets |
| |Current Ratio = ------------------------------ |
| |Total Current Liabilities |
| | |
| |$59,127 |
| |$2.15 to $1 = -------------- |
| |$27,524 |
| | |
| |In other words this operation has $2.15 of current assets to cover each $1 of current debt. |
| |On a side note, most lenders consider a current ratio of 2:1 good. On the other hand a ratio of less than 1:1 could mean that a |
| |business is in serious financial trouble. |
| | |
| |Move to slide 8 |
| | |
| |Debt-to-Equity Ratio |
| |Otherwise known as leverage, it relates total debt to net worth. It reflects the soundness of your business. (Also used on the |
| |Sate and American Degree on page 10) |
| | |
| |Move to slide 9 |
| | |
| |Example of a Debt-to-Equity Ratio: |
| | |
| |Total Liabilities |
| |Debt-to-Equity = ----------------------- |
| |Net Worth |
| | |
| |$50,000 |
| |$2 to $1 = ----------------- |
| |$25,000 |
| |In this scenario the ratio is 2:1, this means that creditors have $2 invested for every $1 the producer has put into the |
| |business. The higher the ratio, the larger the share creditors have in your operation’s assets. This could mean a greater risk |
| |of exposure to both the creditors and yourself. |
| | |
| |Move to slide 10 |
| | |
| |Profit to Gross Income Ratio |
| |This ratio relates the volume of your operation to the Profit (net income) otherwise known as “take home” income. |
| | |
| |Move to slide 11 |
| | |
| |Example of Profit to gross income ratio: |
| | |
| |Profit (net income) |
| |Profit to Gross Income = ------------------------- |
| |Gross Income |
| | |
| |$75,000 |
| |$.50 to $1 = ---------------------- |
| |$150,000 |
| |This example shows that it took $1 of gross income (the measure for volume of a business) to produce $.50 in profit (otherwise |
| |know as take-home income). |
| | |
| |So now that we have discussed specific ratios, let us use one of those ratios to show how the health of a business can improve |
| |over time and how we can use ratios to evaluate the health of that business. |
| | |
|Objective 4: |So now that we have discussed specific ratios, let us use one of those ratios to show how the health of a business can improve |
| |over time and how we can use ratios to evaluate the health of that business. Move to slide 12 |
| | |
| | |
| | |
| |The following is an example of how an agriculture business’s Debt to equity Ratio improved over time. |
| | |
| |2004 2005 2006 2007 |
| |2:1 2:1.1 2:1.4 2:1.7 2:1.9 |
| | |
| |As you can see in the above example, this producers Debt to Equity Ratio or leverage improved over the five-year span. This |
| |improvement shows that the business is getting healthier. A healthier business means more profit in the long run. |
|Review/Summary: |Now let’s summarize what Ratios can do for us as agriculturalists. |
| |Assess or measure individually and relation to others |
| |Compare measures with known benchmark |
| |Calculate measures using good information |
| |Use measures to evaluate past, present, and future |
|Application--Extended |Option 1 – Have students Open their Record Books and develop the three ratios from their records that were presented in the |
|Classroom Activity: |lesson. Have them develop a two-minute speech about their ratios and a justification of their ratios. This can either be turned|
| |into you as the teacher or presented in front of the class. |
| |Option 2 – Have the students develop a top ten list of the most important ratios in developing the health of an agribusiness. |
| |Have them relate this to their SAE. |
|Application--FFA Activity: |Have students research and use specific ratios that will improve the FFA Chapter. Examples are: |
| |Males to females, males to females in leadership positions, amount of community activities to chapter |
| |Development activities to member development activities. |
|Application--SAE Activity: |Have students research and use specific ratios that will improve their individual SAE projects. |
| |These could also be later used in proficiency applications. |
|Evaluation: |Name:___________________ |
| |Date:__________________ |
| | |
| | |
| |1) What is the definition of a ratio? |
| | |
| | |
| | |
| |2) The _____________________________of ratios is allow agriculturalists to keep track of finances without devoting a large amount|
| |of time to study of individual records. |
| | |
| |3) The ______________________________ of ratios occurs when a producer compares specific ratios over a period of years. This is |
| |the most effective way to measure the growth of your operation. |
| | |
| |4) One of the most used of all ratios. It measures Liquidity which is the ability to repay debt. (also used on the State and |
| |American FFA Degree on page10). |
| | |
| |Profit to Gross income Ratio |
| |Debt to Equity Ratio |
| |Current Ratio |
| | |
| |5) Otherwise known as leverage, it relates total debt to net worth. It reflects the soundness of your business. (Also used on |
| |the Sate and American Degree on page 10) |
| | |
| |Debt to Equity Ratio |
| |Current Ratio |
| |Profit to Gross income Ratio |
| | |
| |6) This ratio relates the volume of your operation to the Profit (net income) otherwise known as “take home” income. |
| | |
| |Current Ratio |
| |Profit to Gross Income Ratio |
| |Debt to Equity Ratio |
| | |
| |7) Figure the Following Current Ratio: |
| |Farmer Aggie is trying to determine her current ratio. She has the following information prepared: Her total current assets |
| |equal $103,240. Her total current liabilities equal $51,346. What is her current Ratio? ( Show all math below, circle your |
| |answer) |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |8) Figure the Following Debt to Equity Ratio: |
| | |
| |Farmer Scout is trying to determine his debt-to-equity ratio. He has the following information prepared: His total liabilities |
| |equal $221,923. His total Net Worth equals $99,999. What is his Debt-to-Equity Ratio? ( Show all math below, circle your |
| |answer) |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |9) Figure the Following Profit to Gross Income Ratio: |
| | |
| |Alfred the Greenhand is trying to determine his Profit to Gross Income ratio. He has the following information prepared: His |
| |total gross income for the year from his Fishing Guide Service Entrepreneurship SAE equals $81,003. His total Profit for the |
| |year equals $31,444. What is his Profit to Gross Income Ratio? ( Show all math below, circle your answer) |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |10) True or False (Circle One) |
| | |
| |The following agriculture business’s Debt to equity ratio improved over time. |
| | |
| |2004 2005 2006 2007 |
| |2:1 2:1.1 2:1.4 2:1.7 2:1.9 |
|Evaluation Answer Key: |Name:___________________ |
| |Date:__________________ |
| | |
| | |
| |1) What is the definition of a ratio? |
| | |
| |A financial ratio is simply a comparison of two measurements of a business. These two measurements are expressed in terms of a |
| |ratio or one as a percentage of another. Each ratio is designed to highlight some particular phase of the financial condition of|
| |your business |
| | |
| |2) The primary function of ratios is allow agriculturalists to keep track of finances without devoting a large amount of time to |
| |study of individual records. |
| | |
| |3) The maximum value of ratios occurs when a producer compares specific ratios over a period of years. This is the most |
| |effective way to measure the growth of your operation. |
| | |
| |4) One of the most used of all ratios. It measures Liquidity which is the ability to repay debt. (also used on the State and |
| |American FFA Degree on page10). |
| | |
| |Profit to Gross income Ratio |
| |Debt to Equity Ratio |
| |Current Ratio |
| | |
| |5) Otherwise known as leverage, it relates total debt to net worth. It reflects the soundness of your business. (Also used on |
| |the Sate and American Degree on page 10) |
| | |
| |Debt to Equity Ratio |
| |Current Ratio |
| |Profit to Gross income Ratio |
| | |
| |6) This ratio relates the volume of your operation to the Profit (net income) otherwise known as “take home” income. |
| | |
| |Current Ratio |
| |Profit to Gross Income Ratio |
| |Debt to Equity Ratio |
| | |
| |7) Figure the Following Current Ratio: |
| |Farmer Aggie is trying to determine her current ratio. She has the following information prepared: Her total current assets |
| |equal $103,240. Her total current liabilities equal $51,346. What is her current Ratio? ( Show all math below, circle your |
| |answer) |
| | |
| | |
| | |
| | |
| | |
| |Total Current Assets |
| |Current Ratio = ------------------------------ |
| |Total Current Liabilities |
| | |
| |$103,240 |
| |$2.01 to $1 = -------------- |
| |$51,346 |
| | |
| | |
| |8) Figure the Following Debt to Equity Ratio: |
| | |
| |Farmer Scout is trying to determine his debt-to-equity ratio. He has the following information prepared: His total liabilities |
| |equal $221,923. His total Net Worth equals $99,999. What is his Debt-to-Equity Ratio? ( Show all math below, circle your |
| |answer) |
| | |
| | |
| | |
| |Total Liabilities |
| |Debt-to-Equity = ----------------------- |
| |Net Worth |
| | |
| |$221,923 |
| |$2.219 to $1 = ----------------- |
| |$99,999 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |9) Figure the Following Profit to Gross Income Ratio: |
| | |
| |Alfred the Greenhand is trying to determine his Profit to Gross Income ratio. He has the following information prepared: His |
| |total gross income for the year from his Fishing Guide Service Entrepreneurship SAE equals $81,003. His total Profit for the |
| |year equals $31,444. What is his Profit to Gross Income Ratio? ( Show all math below, circle your answer) |
| | |
| | |
| |Profit (net income) |
| |Profit to Gross Income = ------------------------- |
| |Gross Income |
| | |
| |$31,444 |
| |$.388 to $1 = ---------------------- |
| |$81,003 |
| | |
| |10) True or False (Circle One) |
| | |
| |The following agriculture business’s Debt to equity ratio improved over time. |
| | |
| |2004 2005 2006 2007 |
| |2:1 2:1.1 2:1.4 2:1.7 2:1.9 |
| | |
| | |
| | |
| | |
|Other: | |
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related searches
- zacks research wizard pricing
- zacks research wizard review
- zacks research wizard subscription cost
- zacks research wizard pricing 2016
- research wizard reviews 2017
- zacks research wizard cost
- zacks research wizard price
- zacks research wizard review 2018
- research wizard reviews
- programs zacks research wizard 4.0
- resume wizard for windows 10
- resume wizard google