Long-term farm economic viability is the product of three parts – performance, capacity, and resilience. Performance is an efficiency measure, the ability of the farm business to create profit margins per unit of production. Capacity is whether there are enough production units (acres, cows, etc.) that when multiplied over the profit margin will cover debt service, asset maintenance and replacement, retained earnings and family living. Resilience is the ability of the business to take a punch and bounce back to normal operations.
Host Katie Wantoch and Jenny Vanderlin, Associate Director of the UW Center for Dairy Profitability, discuss whether a farmer should refinance his loans and tips for communicating with his ag lender.
The farm financial model offers a linear and circular process for informed decision-making. Records feed into reports, and reports help farmers integrate financial sense into farm production decisions.
Farming is a complex business which demands accurate records and careful financial management.
An accounting system is a set of actions and methods designed to collect, store, and process financial transactions into management reports for decision-making.
The balance sheet is a report of the farm business’ financial position at a moment in time. It lists assets, liabilities, and net worth (owner’s equity), and represents a snapshot of the farm business as of a certain date.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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 […]
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.
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.
