Preparing an Income Statement
The income statement is a report of the farm business’ financial performance during a given time frame. It measures profit or loss in a given time period.
Financial
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The University of Wisconsin-Madison Division of Extension Financial Management & Strategic Planning programs, information and resources intend to improve the farm financial and decision-making skills of Wisconsin agribusiness, farmers and farm managers, agricultural lenders and educators.
Financial resources
Farm Pulse
Information on how to use farm financials to explore farm business decisions. This course will help farmers evaluate their finances, take the pulse of their farm business, and set goals for the future of their operation.
Farm Business Financial Management Model
The farm financial model helps the farmer make the best decisions for the farm business. From record-keeping to financial analysis, this model illustrates how to make sound financial decisions and identifies tools to help in the process. To understand the farm business’ records, one needs to understand the purpose records serve to and for the farm manager. The Farm Business Financial Model offers a process for informed decision-making.
Records
The farmer must collect and organize income and expense receipts in an accounting system before generating financial statements. Receipt accounting is also referred to as record keeping.
Management Reports
Organizing the records provides the farmer with the financial information necessary to complete management reports, which are also known as financial statements. The Farm Financial Standards Council (FFSC) recommends farmers create four financial statements from which the financial position and performance may be analyzed. Financial statements should be prepared on a consistent basis. Statements include balance sheet, income statement, statement of cash flows, and statement of owner equity.
Decision-Making
Understanding the farm business’s history of financial position and financial performance provides a basis for the farmer to make decisions and plan into the future. Pro forma refers to the future view of the farm’s financial position and performance. For example, what would the balance sheet look like after a future expansion? The future financial position can be analyzed for feasibility, profitability, and risk-ability. Pro forma financial statements complement the farm’s budgets. Cash, partial, and enterprise budgets are commonly used to assist the farmer in decision-making.
Latest Financial News
Articles
Understanding the Statement of Cash Flows
The statement of cash flows tracks the sources and uses of cash in the farm business in the past year. It also adds insight to the understanding of financial position and performance of the farm business.
Understanding the Statement of Owner Equity
The statement of owner equity reconciles the change in equity from the beginning balance sheet to the ending balance sheet for the farm business. Also known as the statement of net worth, shows the source of change.
AgriVision Podcast Episode 8 – Expanding milking herd
Host Katie Wantoch and Heather Schlesser, agriculture educator from Marathon County, discuss whether a dairy farmer and his son should purchase bred heifers or cows to expand their dairy herd.
AgriVision Podcast Episode 7 – Use CFAP funds to pay open accounts first
Host Katie Wantoch and Stephanie Plaster, Agriculture Educator in Ozaukee and Washington counties, discuss a dairy farmer who has received a CFAP payment for their milk production and are wondering who should pay first with this program payment and how much they should pay to vendors.
AgriVision Podcast Episode 6 – Know your cost of production before renting more land
Host Katie Wantoch and Simon Jette Nantel, Professor at UW-River Falls and Extension Farm Management Specialist, discuss if a farmer should offer a lower rental rate per acre to the neighbor who is retiring from farming.
AgriVision Podcast Episode 5 – Problems taking a toll
Host Katie Wantoch and John Shutske, Professor and Director of UW Center for Agricultural Safety and Health and an Extension Specialist, discuss a farmer’s wife who is worried about her husband and the ongoing struggles with their farm business.
AgriVision Podcast Episode 4 – Having surplus feed puts you in the driver’s seat
Host Katie Wantoch and Jerry Clark, Extension Agriculture Agent in Chippewa County, discuss a farmer who wants to know if they should sell surplus crops or keep the feed for next year.
AgriVision Podcast Episode 3 – Off-farm employment loss
Host Katie Wantoch and Jenny Vanderlin, Associate Director of the UW Center for Dairy Profitability, discuss a farmer whose wife lost her off-farm job due and if she should do more work on the farm.
AgriVision Podcast Episode 2 – Selling Heifers
Host Katie Wantoch and Mark Hagedorn, retired Extension Dairy Program Manager, discuss a farmer who wants to know if they should sell pregnant dairy cattle heifers now or wait to sell these animals until after the cow has had her calf.
Tax Preparation Issues and Concerns
As we all know, the month of January often brings thoughts of taxes and tax preparation. Gary will focus on issues specific to farm tax returns so those listening may gain a better understanding of what to think about regarding farm tax preparation and be able to ask better questions with their tax advisor.
Power of One
A new year always elicits new resolutions, goals and plans for how to better our business, family and self. However, a quick google search shows that only 8% of Americans keep their resolutions throughout the year and 80% have failed by February. How can we become an 8-percenter in the new year?
End of Year Considerations and 2020 Tax Planning
Farmers experienced a number of challenges in 2020, including financial spikes and dips. Farmers have several tools available to assist with managing their tax liability, however some of these tools need to be taken advantage of prior to December 31, 2020.
The Art of Negotiating for your Farm Business
Negotiating is important for the success of any business, but it is especially critical during lean times. It may seem like common sense, but many times people let their emotions get the best of them and ignore their basic instincts. It takes homework, discipline, and street smarts to successfully make a deal.
Working With Your Lender
A lender’s primary interest is in whether you’re likely to fulfill the requirements of a credit agreement. When a creditor lends you money, he or she does it with the expectation of earning a profit, which is unlikely to happen if there’s a good possibility that you’ll default on the loan. The lender will be […]
Uncertain Farm Financial Future: On the Fence
I am on the fence, it is a barbed-wire fence, and I want to get off! As I write this article, there is a breath of optimism in the dairy industry. Markets have improved, government program payments are getting to mailboxes and the economy is slowly opening back up. That is good news that I […]
How to prioritize debt repayments
Debt can feel overwhelming. It can be difficult to think clearly when the bills pile up, late fees accrue and interest adds up. Taking a moment to organize your obligations is important to maintain your assets, avoid paying more in fees and interest, and protect your credit. Use the provided tool to develop a comprehensive list of all outstanding creditors so you are able to differentiate and organize secured and unsecured debt.
Standing Strong and Resolute as a Guardian of Your Equity
Equity is the wealth you have earned in your business and what is used to cover negative profits. Continuing negative profits drains your equity. If the prospect for future profits is not high or not high for a while, then the question becomes how much equity are you willing to spend.
