ASFMRA ARA flashcards
ASFMRA ARA · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Highest and Best Use
- The reasonably probable use that is legally permissible, physically possible, financially feasible, and maximally productive, resulting in the highest present value of a property.
- Land Capitalization Rate
- A rate derived from market sales that converts a property's net operating income into an indication of value; computed as net income divided by sale price.
- Allocation Method
- A technique that estimates land value by applying a typical land-to-building value ratio from comparable sales to the total property value.
- Productive Acre
- An acre capable of generating agricultural income; non-productive acres such as roads, waste, and building sites are excluded from per-acre value calculations.
- Irrigation Water Right
- A legal entitlement to divert or use water; its value to land depends on quantity, reliability, transferability, and whether it is appurtenant.
- Animal Unit (AU)
- A standardized measure of grazing demand equal to one mature cow of about 1,000 pounds, with or without a calf, used to set stocking rates.
- Animal Unit Month (AUM)
- The amount of forage consumed by one animal unit in one month; a common unit for pricing grazing leases and measuring carrying capacity.
- Carrying Capacity
- The maximum stocking rate a pasture can support over time without resource degradation, calculated from forage production, harvest efficiency, and consumption per AU.
- Variable Cost
- A cost that changes with the level of production and is avoidable in the short run, such as seed, fertilizer, fuel, and hired labor.
- Fixed Cost
- An overhead cost that does not vary with output in the short run, including depreciation, insurance, property taxes, and interest on long-term debt.
- Break-Even Yield
- The yield required for total revenue to equal total cost at a given price; computed as total cost divided by price per unit.
- Flexible Cash Lease
- A lease in which rent adjusts based on realized prices, yields, or revenue, sharing market risk between landowner and tenant.
- Crop Share Lease
- A lease where landlord and tenant divide the crop and often share selected input costs in agreed proportions, distributing production and price risk.
- Net Present Value
- The sum of a project's future cash flows discounted to present value minus the initial investment; a positive result indicates an acceptable project.
- Amortized Loan Payment
- The level periodic payment that repays principal and interest over the loan term, computed from principal, interest rate, and number of periods.
- Current Ratio
- Current assets divided by current liabilities; it measures the ability to meet obligations due within one year and indicates short-term liquidity.
- Debt-to-Asset Ratio
- Total liabilities divided by total assets; it measures leverage and the proportion of the business financed by creditors rather than owners.
- Term Debt Coverage Ratio
- A measure of repayment capacity comparing funds available for debt service to scheduled principal and interest payments; values above 1.0 indicate coverage.
- Operating Loan
- Short-term credit used to finance variable production inputs within a single production cycle, typically repaid when the crop or livestock is sold.
- Discount Rate
- The rate used to convert future income to present value, reflecting the time value of money and the risk of the expected cash flows.
- Capitalization Rate
- A rate that converts a single year's expected income into value; approximately equal to the discount rate minus expected income growth.
- Enterprise Budget
- A financial statement estimating revenues, variable costs, and fixed costs for a single production activity, used to compare profitability among enterprises.
- USPAP
- The Uniform Standards of Professional Appraisal Practice, which govern appraisal development, reporting, and the required scope of work for assignments.
- Competency Rule
- A USPAP requirement that an appraiser accept an assignment only after confirming the knowledge and experience needed to complete it competently.
- Scope of Work
- The type and extent of research and analysis performed in an assignment, determined by the problem to be solved and the intended use.
- Intended User
- The party or parties identified by the appraiser as the users of the report, whose needs determine the appropriate reporting and analysis.
- Contingent Fee Prohibition
- The ethical rule that appraisal fees may not be contingent on a predetermined value, a direction in value, or a lending decision outcome.
- Extraordinary Assumption
- An assumption about a fact that, if found false, could alter the appraiser's opinion of value; it must be disclosed in the report.
- Hypothetical Condition
- A condition that is contrary to what exists but is assumed for the purpose of analysis; it must be clearly disclosed in the appraisal report.
- Advocacy
- Acting as an advocate for a client's position in an appraisal assignment, which compromises the required independence, impartiality, and objectivity.
- ARA Designation
- The Accredited Rural Appraiser credential awarded by ASFMRA after meeting required education, experience, examination, and ethical standards.
- Appraisal Independence
- The ethical requirement that an appraiser's judgment be unaffected by client pressure, fees, or personal interest in the outcome of the assignment.