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Baron Coburg Case

Analysis and Commentary

Balance Sheet for Farm Worked by Ivan

Beginning of Growing Season(All amounts in bushels of Wheat)

Assets:

Seed 20

Fertilizer 2

Ox 40

Land 100

Total 162

Liabilities & Owner's Equity:

Baron's contribution 162

Total 162

Balance Sheet for Farm Worked by Frederick

Beginning of Growing Season

(All amounts in bushels of Wheat)

Assets:

Seed 10

Fertilizer 1

Ox 40

Land 50

Total 101

Liabilities & Owner's Equity:

Baron's contribution 101

Total 101

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Earnings & Retained earnings for Farm Worked by Ivan

For the Growing Season

(All amounts in bushels of Wheat)

Wheat produced (revenue) 243

Expenses & losses:

Seed used 20

Fertilizer used 2

Depreciation of Ox 4

Depreciation of plow 1

Loss on damage of plow 2

Total expenses 29Earnings 214

Withdrawal by Baron (20)

Increase in "Retained Earnings" 194

Earnings & Retained earnings for Farm Worked by Frederick

For the Growing Season

(All amounts in bushels of Wheat)

Wheat produced (revenue) 138

Expenses & losses:

Seed used 10

Fertilizer used 1

Depreciation of Ox 4

Depreciation of plow 1Loss on damage of plow 0

Total expenses 16

Earnings 122

Withdrawal by Baron (30)

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Increase in "Retained Earnings" 92

Balance Sheet for Farm Worked by Ivan

End of Growing Season(All amounts in bushels of Wheat)

Assets:

Wheat 223

Fertilizer 0

Plow 0

Ox (depreciated) 36

Land 100

Total 359

Liabilities & Owner's Equity:

Payable to Feyador 3

Owner's equity:

Baron's contribution 162

Retained earnings 194

356

Total 359

Balance Sheet for Farm Worked by Frederick

End of Growing Season

(All amounts in bushels of Wheat)

Assets:

Wheat 105Fertilizer 0

Plow (depreciated) 2

Ox (depreciated) 36

Land 50

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Total 193

Liabilities & Owner's Equity:

Owner's equity:

Baron's contribution 101Retained earnings 92

Total 193

Analysis of performance:

Total wheat produced:

Ivan 243Frederick 138

Wheat produced per acre:

Ivan 243/20 acres 12.15

Frederick 138/10 acres 13.8

Profit margin on revenue:

Ivan 214/243 0.881

Frederick 122/138 0.884

Profit per acre:

Ivan 214/20 10.7

Frederick 122/10 12.2

ROI (beg. assets):

Ivan 214/162 1.321Frederick 122/101 1.208

ROI (beg. Assets - 1/2 Ox for Frederick)

Ivan - same as above 1.321

Frederick 124/81 1.531

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ROI (avg. assets):

Ivan 214/(162+359)/2 0.821

Frederick 122/(101+193)/2 0.83

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1.761 times amt. produced by Frederick

per acre

per acre

per acre

per acre