Solvency is a measure
of the ability of a farm or ranch operation to satisfy its debt obligations
when due.
Popular measures of solvency include the
- debt-to-asset ratio,
- debt-to-equity ratio, and
- equity-to-asset ratio.
Assets, Debt, and Wealth
Suggested citation for linking to this discussion:
U.S. Department of Agriculture, Economic Research Service. Farm Sector Income & Finances: Assets, Debt, and Wealth, February 4, 2022.
https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/assets-debt-and-wealth/
USDA ERS - Assets, Debt,
and Wealth The farm business
balance sheet reports estimates of the current market value of farm business
sector assets, debt, and equity as of December 31 of a given year. It is
called a "balance sheet" because of the accounting relationship:
assets – debt = farm equity. Farmers and ranchers, agribusinesses and farm
lenders, program administrators, policy analysts, and others often need
information on ... |
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