Reference no: EM133268848

1. Describe what financial ratios the Chief Operations Officer, the Chief Financial Officer, the bank loan officer for the firm, and a prospective investor might track in an agribusiness. Explain your reasoning.

2. List some of the limitations of ratio analysis for a lender to an agribusiness. What key issues must the lender be aware of if he or she is going to use financial ratios effectively?

3. Why might one firm use one set of financial ratios and another firm use a different set of financial ratios to evaluate financial condition and performance?

4. What specific ratios are used to calculate ROE when using the profitability analysis model? What are two ways the profitability analysis model can be used as an analysis tool for agribusiness managers?

5. What is the desired relationship between return on assets (ROA) and return on equity (ROE)? How might this relationship affect the decision of a loan officer on granting a loan request to purchase additional capital assets?

6. Discuss why it is difficult to recommend a specific level for the leverage ratio (debt path) as it relates to the ROS (operating path), asset turnover(asset efficiency path), and return on investment (ROI)? If the amount of debt used in the firm increases relative to the amount of equity, how will ROE be impacted?