The average farm supply margins in 1994 was 17 percent compared to 4 percent for crop and livestock marketing. Not only is there a marked variance between marketing and farm supply margins, there is also variance among the farm supplies within each product category. Cooperative managers should keep detailed records for each type of product and evaluate the changes from year to year. However, this ratio looks at the whole operation, not just sales. Net income before interest and taxes is used to calculate ROTA because the goal is to reveal total return on assets.
Interest is a return to lenders while taxes can be thought of as return to government investment.
Figure 9 illustrates the historical movement of ROTA over the past few years. The average net income generated from use of the cooperatives assets in 1994 was 7.2 percent. This continues an upward trend following a near 10-year low of 6.5 percent in 1992. However, it is not as high as it was in the late 1980s, when it averaged well over 8 percent. Since this ratio looks at returns on member investment only, it is determined by calculating net income after interest and taxes.