In this financial essay, we are going to talk about the B & B Bounty Dairy Farm and what

things look like over the years. We are going to talk about what their numbers look like and the
trends that they represent. We are looking at the years from 1999-2007 and what I think they
should do differently in the future to make better progress on their farm.
The equation to current ratio is the total current farm assets divided by the total current
farm liabilities. The numbers from B & B Bounty farms look very strong at 6.6 to 1 this is found
if the number is greater than 1.50 which is very good for the current ratio. In 1999 the current
ratio was at .96. In 2000 the current ratio was up to 1.55. In 2001 the current ratio was back
down to 1.06. Then in 2002 it was up again at 1.83. In 2003 the current ratio dropped down to .
98. But then rose again to 1.92 in 2004. But in 2005 the current ratio was at an all-time high at
7.10. And didnt fall much in 2006 when it reached 6.78. And lastly in 2007 the current ratio was
6.6. I think that the trends for the current ratio on B & B were good and were at a current steady
incline throughout the years and then slowly began to go downhill around 2006-2007.
The working capital is found by subtracting the total current farm assets by the total
current liabilities. The numbers from the farm are as followed; In 1999 the number was -8,292.
And then in 2000 the working capital was 215,204. In 2001 the number was down to just 21,965.
But in 2002 the working capital went up a little to 191,001. In 2003 the working capital went
back into the negatives at -3,378, and that was the lowest that it had gone. In 2004 it went back
up to 179,811 and even higher in 2005 at 515,670. 2006 went even higher than that at 770,333.
And finally, in 2007 the working capital reached an all-time high at 777,019. In the end, I think
that the trend on the farm for working capital had its moments but slowly increased over the
years.

Next, the debt to asset ratio can be found by dividing the total liabilities by the total
assets. Which from the numbers throughout the years shows that the farms debt to asset is very
stable and that is in the 30-70% range. The farms number was at 36% and that is very good but if
the number was lower than 30% it would be in the strong category. The numbers for the debt to
asset ratio are; in 1999 the debt to asset was .69. In 2000 it was .58 and in 2001 went even lower
at .55. In 2002 the debt to asset was .45 and the same in 2003. 2004 went up a little to .48 but fell
again to .39 in 2005. In 2006 and 2007 the ratio was the same at .36. The trend shows a steady
incline but takes one little dip towards the end of the years.
To find the debt to equity ratio is found when you divide the total liabilities by the total
farm equity, to find equity you must subtract the assets by the liabilities. B & B farms debt to
equity ratio is at a stable point at 56%, it is in the range from 42-230%. In 1999 the debt to equity
ratio was .69% and then in 2000 the ratio was at .58. 2001 to 2002 the ratio dropped 10 percent
from .55 to .45. 2003 the ratio took a high jump up to .81 and then took an even bigger jump up
to .94 in 2004. In 2005 the debt to equity ratio went back down to .65 and in 2006 went to .57.
And lastly in 2007 the ratio went back down to .56. I think that this trend went all over the place.
The trends were low and then high but towards the end they took a fall again.
Rate of return on assets or (ROA) is figured out by net farm income plus the interest and
then subtracted from the operation costs and then you divide the return to assets by the average
total assets. In B & B farms case their numbers are stable at this point at 9% from a 3-12%
average. In 199 the ROA was at 26.63% and in 2000 it was at 25.81%. then in 2001 it went way
down to 9.28 percent then back up to 16.39 in 2002. In 2003 the ROA took a dive to -11.59 and
raised a little to 2.34 in 2004. The ROA rose again to 18.35 in 2005 and stayed in that rough area
until 2007 where it then dropped to a solid 9%. There really is no good trend to the rate of return

on B & B Dairy Farms, the number are all over the place and never reach a solid steady pace
throughout the years from 1999-2007.
The rate of return on equity or (ROE) if figured out by the Net Farm Income from
Operations minus the Opportunity Cost of Unpaid Operator and Family labor and that figures the
Return to Equity you divide that by the Average Farm Equity to find the final ROE. In 1999 the
ROE was 68.66% and dropped to 59.96 in 2000. Then in 2001 the ROE went down to 14.14 and
back up in 2002. 2002 and 2003 were the same at 26.15. 2004 took a huge dive to .43% In 2005
and 2006 the ROE went back up to 28.09 and 19.23. Finally, in 2007 the numbers went back
down to 10.89. The trend for these numbers varies, they are strong in the beginning and then
weak in the middle of the years. As the years come to an end they begin to slowly increase again
but not as high as in the beginning.
To find the Operating Expense Ratio, you must minus the Total Operating Expense by the
Depreciation, and then divide that answer by Total Revenue and you will find the Depreciation
Ratio. At the B & B Bounty Dairy Farm their numbers are looking weak at 84% and if it is
greater than 80% it becomes weak.
Lastly, to find Net Farm Income from Operations you must divide the Net Farm Income
from Operations by the Total Revenue to get the ending Net Farm Income from Operations. And
the final value from the farm is .14:1.
I think one recommendation that I would give B & B Bounty Dairy Farms would be,
something along the lines of changing what they are doing with the Operating Expenses. Their
numbers were weak and I think that there could be some changing to fix that and make the

values go back up to stable or maybe even to the strong range. If they fix that all their values
would be stable to weak and none in the weak area.
Another recommendation would be, to change their Debt to Asset ratio a little bit. They
are at a good place as of now because it is still in the value of stable. But I think if they changed
a few things in the future they could reach a strong value. And if they changed that, that would
make an even better farm in the future for B & B Farms. They would be on the path of making
all of their values strong and their farm would look really good to everyone who has to look at
the numbers.
And the last recommendation that I would give this farm to help with their financial
statement is, also making the Debt to Equity values reach the strong area of the spectrum. That
way all their values would be strong and looking positive. They would not have anything looking
bad on their financial statement and the farm would be doing very well.
In conclusion, I think that B & B Farms would be very strong if they took the advice that
I gave them to change on their farm. If they took all three of those and changed them exactly
how they should, they would be very pleased with what their financial statement looks like in the
end. They have quite a few years of date to work with which is a good thing on their part so they
can look at al of the changes and see where the farm is headed. They will be able to tell if the
farm is headed down a straight and positive road, or if there are more changes that need to be
found and changed as they continue to proceed on through many more years.