52 July 1989
Western Journal of Agricultural Economics
Table 2. Annual Simulation Results with and without Credit-Scored Pricing under Alternative
Growth Rates and Beginning Leverage Positions
Year 12345 6 7 8 9 10' |
Total | |
I |
No price response; D∕A, 30%; growth rates, 3% Net worth change, Return on assets, % 7.93 8.20 8.11 9.34 8.40 9.44 8.60 9.50 9.67 8.94 Return on equity, % 7.08 7.62 7.47 8.40 7.69 8.53 7.87 8.61 8.80 8.22 Debt to assets, % 27.7 24.7 23.3 27.6 26.1 29.3 27.7 30.1 32.0 30.1 Land purchases, acres 0 0 0 40 0 40 0 40 40 0 |
160 |
II |
Credit score 10 6488 8 8 8 8 8 Credit class 211 2 2 2 2 2 2 2 Interest rate, % H-O 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 Price response; D∕A, 30%; growth rates, 3% Net worth change, Return on assets, % 7.93 8.14 7.95 9.10 9.30 8.44 9.27 9.54 8.82 9.62 Return on equity, % 7.43 7.86 8.14 9.23 9.60 8.80 9.63 9.10 8.48 8.89 Debt to assets, % 27.5 24.6 23.1 27.2 30.3 28.4 30.6 32.4 30.4 34.5 Land purchases, |
240 |
III |
Credit score 10 6466 6 8 8 8 8 Credit class 2 1 1 1 1 1 2 2 2 2 Interest rate, % 10.0 8.0 8.0 8.0 8.0 8.0 10.0 10.0 10.0 10.0 Price response; D∕A, 30%; growth rates: operating and other costs 3%, farm income and land values, 5% | |
Net worth change, Return on assets, % 7.93 9.69 9.90 11.45 11.89 12.20 12.42 13.05 11.90 14.05 Return on equity, % 8.98 9.96 10.68 12.32 13.15 13.79 14.24 14.03 13.04 15.43 Debt to assets, % 27.2 24.0 22.2 26.0 28.6 30.3 31.2 34.3 31.5 35.7 Land purchases, |
360 | |
IV |
Credit score 10 6 4 4 6 6 8 8 10 10 Credit class 2 1 1 1 1 1 2 2 2 2 Interest rate, % 10.0 8.0 8.0 8.0 8.0 8.0 10.0 10.0 10.0 10.0 Price response; D∕A, 60%; growth rates: operating and other costs, 3%; farm income and land values, 5% | |
Net worth change, Return on assets, % 7.93 11.54 12.03 12.26 12.62 13.14 13.66 15.22 16.30 14.68 Return on equity, % 5.88 8.64 10.01 12.93 13.56 14.30 15.89 18.10 19.90 18.40 Debt to assets, % 58.9 56.9 54.3 50.1 45.2 39.4 31.9 32.7 38.0 32.1 Land purchases, |
120 | |
V |
Credit score 24 24 22 18 18 12 6 6 6 8 Credit class 4 4 3 3 3 2 1 1 1 2 Interest rate, % 14.0 14.0 12.0 12.0 12.0 10.0 8.0 8.0 8.0 10.0 Price response; D∕A, 30%; growth rates: operating and other costs, 3%; farm income and land values, ~ 1% | |
Net worth change, Return on assets, % 7.93 4.99 3.90 4.28 2.87 2.18 1.68 1.03 0.38 -0.28 Return on equity, % 4.25 3.52 2.69 2.60 0.83 -0.13 -1.77 -3.07 -4.60 -6.54 Debt to assets, % 28.0 25.9 25.1 30.6 29.7 29.5 30.4 32.3 35.2 39.1 Land purchases, |
40 | |
Credit score 8 6 6 6 6 10 12 12 14 20 Credit class 21111 22 2 2 3 Interest rate, % 10.0 8.0 8.0 8.0 8.0 10.0 10.0 10.0 10.0 12.0 |