372 PROFITABLE CROP PRODUCTION 



value of the increased yield for each fertilizer treatment must 

 necessarily be obtained in a similar manner as described in the 

 foregoing paragraphs. 



Basis of Computing Returns.— The following questions now 

 arise: "Upon what basis should the profits be computed? Should 

 the profits be expressed in terms of per cent of the cost of the fertil- 

 izer, or should they be expressed in terms of net profits per acref'^ 



In all farm accounting, the cost of fertilizer is considered an 

 expense and is charged against the crop. To be consistent, this 

 expense should not be considered as capital permanently invested. 



The two main benefits derived through proper fertilization are: 

 (a) the productivity of the soil is increased, and (6) the soil 

 reserve of some of the important elements of plant-food is increased 

 or maintained. These benefits result in an '^ appreciation" which 

 is an increase in the value of the land. 



Moreover^ expressing profits in terms of per cent on money 

 paid out, or invested, is deceiving. Some business men have gone 

 into bankruptcy because they relied too much upon what per 

 cent seemed to show. In business administration it is recognized 

 that actual profits above total costs determine which of two invest- 

 ments or business ventures, for example, is the more profitable. 



An Example.- ^A^^gSimed a net profit of 400 per cent on money 

 he invested. "B'' gained a net profit of ten per cent. This does 

 not necessarily mean that "A'^ made the more profitable invest- 

 ment. "A" had one dollar of ready money and invested it in 

 popcorn, and in so doing gained a net profit of four dollars. '^B,'^ 

 on the other hand, did not have any ready money, but seeing an 

 opportunity to make a safe investment, he borrowed ten thousand 

 dollars at six per cent interest for one year. He made the invest- 

 ment, "turned" the property within the year, and received 

 eleven thousand six hundred dollars. He returned the ten thousand 

 dollars which he borrowed, paid six hundred dollars interest, and 

 had one thousand dollars left as profit. It would be needless to 

 say that "B" made the more profitable investment. 



Acre Profits. — ^As regards crop production, farmers and land 

 owners think in terms of acres, and they plan to secure the most 

 profits per acre. Ordinarily when they fertihze, they hope to 

 increase these profits even though the cost of producing the crop 

 is augmented. Any fertihzer treatment, therefore, which gives^ 

 the greatest value of crop increases above the fertilizer and other 

 increased cost per acre will usually be the most profitable. 



