Question

if a farm has nfio of $100,000, and an opportunity cost total of $25,000, what is the farm's return to equity? (round to the nearest cent. do not include commas or dollar signs) selected answer: 75000 correct answer: 75,000 answer range /- 0 (75000 - 75000 )

Answer 1

The return to equity is $75000

Another form of financial ratio is the return on equity. Financial ratios are data taken from a firm's financial statements and used to predict and draw specific conclusions about the organization.

Relative return on equity is a tool used to forecast a company's profitability. It evaluates how effectively people employed in any business have used the money that has been invested.

Since the farm has Nfio of $100,000 and an opportunity cost total of $25,000.

Therefore,

Return on equity -

Net Farm Income from Operations - Opportunity cost

= 1,00,000 - 25,000

= 75,000

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