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Transcript
Slide Show #2 AGEC 489/689 Spring 2009 Overview of Financial Statements Annual Consolidated Balance Sheet Basic Structure of the Balance Sheet Assets: Liabilities and Net Worth: Current assets Current liabilities plus Intermediate assets plus Intermediate liabilities plus Long term assets plus long term liabilities plus Net worth equals Total assets equals Total liabilities and net worth Basic Structure of Income Statement Value of farm production Minus Farm expenses Equals Income from operations Plus Gain (loss) on sale of intermediate and long term assets Equals Net farm income Plus Nonfarm income Equals Income (loss) before taxes and extraordinary items Minus Provision for income taxes Equals Income before extraordinary items Plus Extraordinary items Equals Net income Basic Structure of Cash Flow Statement Cash available Minus Cash required Equals Cash available less cash required Plus Savings withdrawals Equals Cash position Plus Net borrowing Minus Other uses of cash Minus Additions to savings Equals Ending cash balance Implications for balance sheet Cash Available Segment Cash available: Beginning cash $0 Crop receipts $0 Livestock receipts $0 Breeding livestock receipts $0 Livestock product receipts $0 Other cash farm revenue $0 Nonfarm wages and salaries $0 Other nonfarm cash revenue $0 Gain on asset sale $0 Gifts and other cash available $0 Total cash available $0 Cash Required Segment Cash required: Total operating expenses Income tax payments Intermediate term loan payments: Interest payments Principal payments Long term loan payments: Interest payments Principal payments Capital expenditures: Machinery and motor vehicles Breeding livestock Buildings and improvements Land Family living expenses Other cash required Total cash required $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Annual Ending Cash Balance Cash available minus cash required + Savings withdrawal = Cash position $0 + New borrowing: Intermediate term loans Long term loans Short term loans Total new borrowing $0 $0 $0 $0 $0 - Other uses of cash: Short term loan payments: Interest payments Principal payments Additions to saving $0 $0 $0 $0 $0 = Ending cash $0 $0 $0 Implications for balance sheet Monthly Cash Available January February March Beginning cash $0 $0 $0 Crop receipts $0 $0 $0 Livestock receipts $0 $0 $0 Breeding livestock receipts $0 $0 $0 Livestock product receipts $0 $0 $0 Other cash farm revenue $0 $0 $0 Nonfarm wages and salaries $0 $0 $0 Other nonfarm cash revenue $0 $0 $0 Gain on asset sale $0 $0 $0 Gifts and other cash available $0 $0 $0 $0 $0 $0 Cash available: Total cash available Monthly Cash Required Cash required: Total operating expenses Income tax payments Intermediate term loan payments: Interest payments Principal payments Long term loan payments: Interest payments Principal payments Capital expenditures: Machinery and motor vehicles Breeding livestock Buildings and improvements Land Family living expenses Other cash required Total cash required January February March $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Monthly Cash Position January February March Cash available Cash required Savings withdrawal Cash position Indicates monthly cash flow surpluses or deficits before borrowing on a LOC… Implications for cash flow liquidity. Debt Repayment Capacity Statement Repayment Capacity from Operations….. Debt Repayment Capacity Report Farm sources of term debt repayment capacity: Net income $0 $0 Adjustments to net income: Plus Depreciation Less (plus) the gain (loss) on sale of assets Less Nonfarm income Less Family living withdrawals Less Gifts to others Subtotal $0 $0 $0 $0 $0 $0 $0 Term debt repayment capacity from operations Important$0to lenders Remaining Capacity from Operations…. Uses of farm term debt repayment capacity: Principal payments on term debt $0 Downpayments on new capital purchases $0 Deliquent notes payable $0 Current uses Farm capacity less current payments $0 $0 $0 Term debt repayment capacity from operations less current uses… Total Repayment Margin Other sources of term debt repayment capacity: Gain (Loss) on sale of intermediate and long term assets $0 Nonfarm income $0 Other sources (e.g., gifts received) $0 Subtotal Capital replacement and term debt margin $0 $0 $0 Funds available after accounting For other sources… Increasing important to lenders.
