Du Pont Model

SIMPLIFIED DU PONT FINANCIAL ANALYSIS MODEL: MARKET BASIS
Return on average farm equity (ROE) 5.5%
Return on average farm assets (ROA) 6.8%
plus
Spread between ROA and COL -1.0%
multiplied by
Average debt/equity ratio 1.25
minus
Average cost of liabilities (COL) 7.8%
Operating profit margin 15.7%
multiplied by
Asset turnover ratio 43.1%
Average farm equity, market $800,000
divided into
NFIFO - Withdrawals + Interest expense $122,000 $776,000 $499,000 $95,000 $78,000 $104,000 $60,000 $44,000 $300,000 $1,500,000 $1,200,000 $200,000 $800,000
divided by
Gross revenue $776,000
divided by
Average farm assets, market $1,800,000
less
Average farm liabilities $1,000,000
Gross revenue Operating expense Depreciation expense Interest expense = Net farm income from operations (NFIFO) + Withdrawals as unpaid labor = Return to operator capital* Average current farm assets** Average noncurrent farm assets, market Average noncurrent farm assets, book Average current farm liabilities** Average noncurrent farm liabilities = = = + = $1,800,000 6.8% $122,000 $78,000 $44,000 $800,000 5.5% $44,000 $60,000 $104,000
Liquidity ratios Current ratio Working capital Solvency ratios Debt/asset ratio, market Debt/asset ratio, book Equity/asset ratio, market Equity/asset ratio, book Debt/equity ratio, market Debt/equity ratio, book
1.50 $100,000
53.3% 66.7% 46.7% 33.3% 1.14 2.00
Average farm assets, market Return on average farm assets Return to average farm assets Less interest expense Return to operator capital* Average farm equity, market Return on average farm equity Return to operator capital* Withdrawals as unpaid labor Return to operator***
Operational efficiency ratios Operating expense ratio 64.3% Depreciation expense ratio 12.2% Interest expense ratio 10.1% NFIFO ratio 13.4%
*Return to average farm equity before income taxes and nonrecurring gains/losses on sale of capital assets. **Optional data necessary for liquidity analysis. ***Return to average farm equity and labor/management before income taxes and nonrecurring gains/losses on sale of capital assets.
Copyright 1993-05
3/9/2012
DETAILED DU PONT FINANCIAL ANALYSIS MODEL: Rolling Acres, Book Basis

Return on average farm equity 3.2%
plus
Spread between ROA and COL -1.2%
multiplied by
subtracted by
Average cost of liabilities (COL) 6.3%
Operating profit margin 15.9%
multiplied by
Asset turnover ratio 0.32
NFIFO - Withdrawals + Interest expense $105,100
divided by
Gross revenue $661,782
divided by
Average farm assets $2,076,420
Average farm equity $822,397
divided into
Average farm liabilities $1,254,023
Income Statement $/Bushel Crop Bushels 1 122,880 2.45 2 35,488 5.25 3 43,225 2.75 Livestock Head Weight $/Cwt 1 2 3 Other revenue Gross revenues Operating expenses Depreciation expense Interest expense Net farm income from operations (NFIFO) Withdrawals as unpaid labor Other withdrawals (net of nonfarm income) Operational efficiency ratios Operating expenses/Gross revenues Depreciation expense/Gross revenues Interest expense/Gross revenues Net farm income from operations/Gross revenues
Revenue 301,056 186,312 118,869 55,545 661,782 393,316 118,366 78,413 71,687 45,000 20,000
Average current farm assets $302,955 Cash Crop inv. Lvstk inv. Receivables 302,955 Other 302,955 Total
plus
Average noncurrent farm assets $1,773,465 Breed stock Machinery Real estate Buildings 1,773,465 Other 1,773,465 Total
Average current farm liabilities $551,499 Notes pay. Accrued int. Current port. Taxes pay. 551,499 Other 551,499 Total
plus
Average noncurrent farm liabilities $702,524 Notes pay. Mortg. pay. Deferred tax 702,524 Other 702,524 Total Valuation
59.4% 17.9% 11.8% 10.8%
Repayment capacity Net farm income from operations (NFIFO) + Depreciation expense Withdrawals as unpaid labor Other withdrawals (net of nonfarm income) Total income tax expense + Interest on term debt Repayment capacity Principal paid on term debt Interest on term debt Repayment margin Term debt service coverage ratio
71,687 118,366 45,000 20,000 17,436 71,047 178,664 124,100 71,047 (16,483) 0.92
Liquidity ratios Current ratio 0.55 -$248,544 Working capital Solvency ratios Debt/asset ratio Equity/asset ratio Debt/equity ratio
Run Description Rolling Acres, Book Basis
60.4% 39.6% 1.52 xxx Primary inputs necessary for analysis xxx Secondary inputs optional to enhance analysis
Copyright 1993-05
3/9/2012

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SIMPLIFIED DU PONT FINANCIAL ANALYSIS MODEL: MARKET BASIS

Return on average farm equity (ROE) 5.5%

Return on average farm assets (ROA) 6.8%

Spread between ROA and COL -1.0%

Average debt/equity ratio 1.25

Return on average farm assets (ROA) 6.8%

Average cost of liabilities (COL) 7.8%

Average debt/equity ratio 1.25

Operating profit margin 15.7%

Asset turnover ratio 43.1%

Average farm equity, market $800,000

Gross revenue $776,000

Average farm assets, market $1,800,000

Average farm liabilities $1,000,000

53.3% 66.7% 46.7% 33.3% 1.14 2.00

DETAILED DU PONT FINANCIAL ANALYSIS MODEL: Rolling Acres, Book Basis

Return on average farm assets (ROA) 5.1%

Spread between ROA and COL -1.2%

Average debt/equity ratio 1.52

Return on average farm assets (ROA) 5.1%

Average cost of liabilities (COL) 6.3%

Operating profit margin 15.9%

Asset turnover ratio 0.32

Average debt/equity ratio 1.52

NFIFO - Withdrawals + Interest expense $105,100

Gross revenue $661,782

Average farm assets $2,076,420

Average farm equity $822,397

Average farm liabilities $1,254,023

59.4% 17.9% 11.8% 10.8%

Run Description Rolling Acres, Book Basis

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