Mary Sobba Agriculture Business SpecialistFarming, Women and Money
ObjectivesKeep good recordsConstructing financial statementsUnderstanding financial statements
Financial RecordsIt is too hardWhat do I know about farmingI am not an accountantSchedule F is hard enough for meSomeone else keeps the books and it is not my responsibility.There is not enough time.
Take ActionMake sure you have a set place to work on records (preferably not the kitchen table.)Set aside a little time and get in a routine
Regular financial dutiesPaying bills and payrollWriting correspondenceScheduling when money comes in and goes out.Reviewing debt obligationsPaying debtDepositing moneyAllocating money to investments, operating accounts, checking accounts, etc.Reconcile checkbook (important way to find errors)
Financial StatementsBalance SheetCash FlowIncome Statement
Key Financial TermsBalance Sheet-A statement of financial position that shows the assets, liabilities, and net worth of the business at any one given point in time.
Assets-Everything that the business owns, including such items as cash, inventory, prepaid expenses, and equipment..
Key Financial TermsCurrent Assets-What the business owns that is expected to be turned into cash within one year-such as accounts receivable and inventory Non CurrentIntermediate Assets-What the business owns that has a moderate length of life of over 1 year but not more than 7 in most cases. Fixed Assets-Assets that are used to generate revenue for the business such as buildings, machinery and land..
Key Financial TermsDepreciation-The process of allocating the cost of a fixed asset (such as equipment) to the period that it benefits the business-writing off its cost over its useful life. Not a cash expenditure.Liabilities-What the business owes to creditors and to the people who supply funds that must be repaid. Debt is used to describe an ongoing liability, such as a bank loan.
Key Financial TermsCurrent Liabilities-Obligations which are due to be repaid within one year.Non-CurrentIntermediate Liabilities- Obligations that are due to be paid longer than one year but usually within 3-7 years.Long-Term Liabilities-Obligations that are scheduled to be repaid in a period greater than 7 years. This is also referred to as Long-Term Debt.
Key Financial TermsOwners Equity-The value of the owners in the assets of the business. The equity of the owners is the assets less the liabilities. This is also called Net Worth.Net Profit-The amount remaining after deducting all costs of doing business.
Key Financial TermsGross Profit - Sales minus the Cost of Goods Sold, which is the cost of purchasing or producing the goods sold during that accounting period.Income Statement-The summary of the revenues, costs, and expenses of a company that are recognized during an accounting period. Also, frequently called a profit and loss statement, P & L, or income and expense statement
Balance SheetA Balance Sheet is a snapshot of how funds are invested in a business (assets) and the financing methods used (liabilities and owners equity) at any one given point in timeTypically, done at the same time each year.
Current _____Current _____Non CurrentNon CurrentIntermediate _____Intermediate _____Long Term _____Long Term _____Total Assets _____Net Worth _____
Income StatementGross Cash Income _______Cash Operating Expense(-) _______Net Cash Income(=)_______Inventory Changes (+ or -)_______Depreciation(-)_______Net Farm Income (=)_______
Cash FlowMonthly Projections and ActualCan you meet financial obligations in a timely fashion?What is generating income?
Income StatementDid you make moneyProjections and ActualCan you meet financial obligations in a timely fashion?What is generating income?
Questions?Mary Sobba (573) 581-3231 firstname.lastname@example.org