What is the 2009 operating expense ratio for FFA farm?

What is the 2009 operating expense ratio for FFA farm?

• A. .50
• B. .67
• C. .75
• D. .80

Answer: (B)

The operating expense ratio shows what share of gross income is eaten up by operating costs. You find it by dividing total operating expenses by gross income from farm production. For the 2009 data on FFA farm, this ratio is about 0.67, meaning 67% of gross income went toward operating expenses. The remaining 33% is left as gross margin before other costs. So the option that equals 0.67 best matches the data. The other values (0.50, 0.75, 0.80) would imply noticeably different shares of income spent on operating costs, which isn’t supported by the data.

The operating expense ratio shows what share of gross income is eaten up by operating costs. You find it by dividing total operating expenses by gross income from farm production. For the 2009 data on FFA farm, this ratio is about 0.67, meaning 67% of gross income went toward operating expenses. The remaining 33% is left as gross margin before other costs. So the option that equals 0.67 best matches the data. The other values (0.50, 0.75, 0.80) would imply noticeably different shares of income spent on operating costs, which isn’t supported by the data.