Management flexibility may be lost under heavy debt situations because there may be no cash available for additional resources such as extra fertilizer or purchased grain which would enhance production. Another problem is the inability to refinance an operation which already carries a large debt commitment. Return to Equity is calculated by dividing net profit by net worth. It represents the return to the owner's investment in the business. Financial Progress is an observation over time used to indicate how much progress has been made and how it was accomplished.
Financial progress is measured by a change in net worth.
If net worth has increased, the reason may be important. It is important when evaluating financial position that all these figures and ratios be observed simultaneously. An independently calculated measure may not accurately reflect the total financial position.