Change in Real Net Worth

Percentage change in real net worth over the simulation period, 1996-2000.

Net Cash Income

Total cash receipts minus total cash expenses; excludes family living expenses, principal payments, and costs to replace capital assets.

Real Net Worth

Total assets minus total liabilities, including accrued income taxes and discounted to 1996 dollars using the CPI.

Probability of Lower Real Equity

The chance that the farm will generate a lower real ending net worth in year 2003 than it started with on January 1, 1995.

Standard Deviation

A statistical measure of the absolute variability or risk associated with a variable. The standard deviation is expressed in the same units as the variable. The value is always positive and the larger it is, the more risk is associated with the variable.

Coefficient of Variation

The ratio of the standard deviation to the mean, expressed as a percent. By expressing the standard deviation as a percent of the mean one can compare the relative risk associated with a particular variable, across policy scenarios. Draw backs to the coefficient of variation are that it becomes large as the mean decreases to zero and it assumes the sign for the mean.