Mary SobbaAgriculture Business Specialist
Farming, Women and Money
Objectives
• Keep good records
• Constructing financial statements
• Understanding financial statements
Financial Records
• It is too hard• What do I know about farming• I am not an accountant• Schedule F is hard enough for me• Someone else keeps the books and it is not
my responsibility.• There is not enough time.
Take Action
• Make 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 duties
• Paying bills and payroll• Writing correspondence• Scheduling when money comes in and goes out.• Reviewing debt obligations• Paying debt• Depositing money• Allocating money to investments, operating
accounts, checking accounts, etc.• Reconcile checkbook (important way to find
errors)
Financial Statements
1. Balance Sheet
2. Cash Flow
3. Income Statement
Key Financial Terms
Balance 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 Terms
Current 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 Terms
Depreciation-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 Terms
Current Liabilities-Obligations which are due to be repaid within one year.
Non-Current
Intermediate 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 Terms
Owners 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 deductingall costs of doing business.
Key Financial Terms
Gross 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 Sheet
A Balance Sheet is a snapshot of how funds are invested in a business (assets) and the financing methods used (liabilities and owner’s equity) at any one given point in time
Typically, done at the same time each year.
Balance Sheet
Assets Liabilities
Current _____ Current _____
Non Current Non Current
Intermediate _____ Intermediate _____
Long Term _____ Long Term _____
Total Assets _____ Net Worth _____
Income Statement
Gross Cash Income _______
Cash Operating Expense (-) _______
Net Cash Income (=)_______
Inventory Changes (+ or -)_______
Depreciation (-)_______
Net Farm Income (=)_______
Cash Flow
1. Monthly
2. Projections and Actual
3. Can you meet financial obligations in a timely fashion?
4. What is generating income?
Income Statement
1. Did you make money
2. Projections and Actual
3. Can you meet financial obligations in a timely fashion?
4. What is generating income?
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