The debt-to-equity ratio and the debt-to-asset ratio are major indicators of the financial well-being of the farm sector. Lower ratios signify that farmers are relying less on borrowed funds to finance their asset holdings. The steady decline in both ratios since the mid-1980s is due to relatively large growth in the value of farm assets (driven principally by increases in farm real estate values), while farm-debt levels increased at a much slower pace.
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