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AGEC 432 – Finance Spring 2007

AGEC 432 – Finance Spring 2007. Structure 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

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AGEC 432 – Finance Spring 2007

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  1. AGEC 432 – FinanceSpring 2007 Structure of Financial Statements

  2. Annual Consolidated Balance Sheet

  3. Basic Structure of the Balance Sheet Assets: Liabilities and Net Worth: Current assets Current liabilities plusIntermediate assets plusIntermediate liabilities plusLong term assets pluslong term liabilities plus Net worth equalsTotal assets equalsTotal liabilities and net worth

  4. Basic Structure of Income Statement Value of farm production MinusFarm expenses Equals Income from operations PlusGain (loss) on sale of intermediate and long term assets EqualsNet farm income Plus Nonfarm income EqualsIncome (loss) before taxes and extraordinary items Minus Provision for income taxes Equals Income before extraordinary items Plus Extraordinary items Equals Net income

  5. Basic Structure of Cash Flow Statement Cash available MinusCash required EqualsCash available less cash required PlusSavings withdrawals Equals Cash position Plus Net borrowing MinusOther uses of cash Minus Additions to savings EqualsEnding cash balance

  6. 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 Available Segment

  7. Cash required: Total operating expenses $0 Income tax payments $0 Intermediate term loan payments: Interest payments $0 Principal payments $0 Long term loan payments: Interest payments $0 Principal payments $0 Capital expenditures: Machinery and motor vehicles $0 Breeding livestock $0 Buildings and improvements $0 Land $0 Family living expenses $0 Other cash required $0 Total cash required $0 Cash Required Segment

  8. Cash available minus cash required $0 + Savings withdrawal $0 = Cash position $0 + New borrowing: $0 Intermediate term loans $0 Long term loans $0 Short term loans $0 Total new borrowing $0 - Other uses of cash: $0 Short term loan payments: $0 Interest payments $0 Principal payments $0 Additions to saving $0 = Ending cash $0 Annual Ending Cash Balance

  9. January February March Cash available: 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 Total cash available $0 $0 $0 Monthly Cash Available

  10. Cash required: Total operating expenses $0 Income tax payments $0 Intermediate term loan payments: Interest payments $0 Principal payments $0 Long term loan payments: Interest payments $0 Principal payments $0 Capital expenditures: Machinery and motor vehicles $0 Breeding livestock $0 Buildings and improvements $0 Land $0 Family living expenses $0 Other cash required $0 Total cash required $0 Monthly Cash Required JanuaryFebruaryMarch

  11. Monthly Cash Position JanuaryFebruaryMarch Cash available Cash required Savings withdrawal Cash position Indicates monthly cash flow surpluses or deficits before borrowing on a LOC…

  12. Debt Repayment Capacity Statement

  13. Debt Repayment Capacity Report Farm sources of term debt repayment capacity: Net income $0 $0 Adjustments to net income: Plus Depreciation $0 Less (plus) the gain (loss) on sale of assets $0 Less Nonfarm income $0 Less Family living withdrawals $0 Less Gifts to others $0 Subtotal $0 $0 Term debt repayment capacity from operations $0 Repayment Capacity from Operations…..

  14. 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 $0 $0 Farm capacity less current payments $0 Remaining Capacity from Operations…. Term debt repayment capacity from operations less current uses…

  15. 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 $0 $0 Capital replacement and term debt margin $0 Total Repayment Margin Funds available after accounting For other sources…

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