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MF275a Worksheet Cash Flow Projection for Operating Loan

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									K         A       N    S       A       S       KSU Farm Management Guide                                       MF-275a
FARM MANAGEMENT
                                              Worksheet: Cash Flow Projection
                                              for Operating Loan Determination
                                                                A Short-run Feasibility Tool
          MARKETING
                                              Department of Agricultural Economics                   Manhattan, Kansas
H     A       N   D   B    O       O   K

                                                   Larry N. Langemeier
                                              Extension Agricultural Economist
                                                 Farm Management Studies


   A cash flow statement can be described simply as a              The “Annual Estimate” column should be completed
recording of the dollars coming in and the dollars going        first. Then, the annual estimate can be allocated to the
out of a business. It shows where the money comes from          various months or periods. Cash inflow and outflow
(the inflow of cash) and where the money goes (the              items are recorded as follows:
outflow of cash).                                                  1. Lines 1 through 15 are for cash inflow items. Farm
   A record of cash inflow and outflow that has already                cash inflow items are recorded on lines 1 through
occurred in a business is an actual or historical cash flow.           11 and nonfarm income items involved in the total
An estimate or forecast of cash inflow and outflow into                family business operation are recorded on lines 13
some future period is a cash flow projection. The actual               through 15.
cash flow of a business provides important information             2. Lines 17 through 47 are for cash outflow items.
for making a cash flow projection into the future. The                 Farm cash operating expenses are recorded on lines
cash flow projection provides information on the cash-                 17 through 36. Cash payments on livestock, machin-
generating ability and the cash requirements of a business             ery, equipment, buildings and land are recorded on
and it indicates the timing of both.                                   lines 38 through 41. Nonfarm business and family
   A cash flow can be set up for either the entire farm                expenses including income taxes are recorded on
business (including family living expenses and nonfarm                 lines 43 through 47.
income) or it can be set up to study only a segment of the         3. After totaling the cash inflow and cash outflow
business. A cash flow projection often includes only the               items, subtract the “Cash Outflow Items” (line 48)
cash inflow and outflow effect of a proposed business                  from the “Cash Inflow Items” (line 16) to arrive at
expansion.                                                             the “Net Cash Flow” on line 49. The net cash flow
                                                                       for each period may be positive or negative. If cash
Preparing a Cash Flow Projection                                       inflow in the period is greater than cash outflow, the
   This cash flow projection form has been developed to                net cash flow is positive. If cash inflow is less than
study the annual operating loan needs of a farm business               cash outflow, net cash flow is negative.
including nonfarm income and expense. The form may                 The “Projected Operating Loan Balance” is deter-
also be used to study the short-run feasibility of a farm       mined on line 50. Operating loans carried over from the
business change. A cash flow projection is made on a            period just prior to the projection period are recorded on
period basis which may be monthly, bimonthly, quar-             line 50 under the heading “Projected Operating Loan
terly, semiannual, or annual. This cash flow projection         Balance” in the space marked “Operating Loan Carried
form is designed to be used on a monthly basis; however,        Over From Last Period.” If no operating loan existed at
the form can be used for periods other than one month by        the end of the last period and if a surplus of cash was
changing the column headings.                                   available in the business, this amount should be recorded
   Information for preparing a cash flow projection may         in the same space and designated as “SURPLUS.”
come from many sources, including:                                 The January “Projected Operating Loan Balance” (line
   1. Records of actual cash flow or other farm records         50) is determined by combining the “Operating Loan
       from past years.                                         Carried Over From Last Period” with the January “Net
   2. Tax returns.                                              Cash Flow” from line 49. Each period thereafter, the
   3. Publications listing investment requirements for          “Projected Operating Loan Balance” is determined by
       crops and livestock enterprises.                         combining the previous period “Projected Operating Loan
   4. Publications listing feed requirements for livestock      Balance” (line 50) with the “Net Cash Flow” (line 49) for
       enterprises.                                             that period. If a surplus exists and borrowings are not
   5. Price and yield estimates.                                necessary, list the surplus in that month on line 50 and
                                                                label it “SURPLUS.”
Financial Management 4—Revised October 1996
                                                                                                                               CASH FLOW PROJECTION FOR OPER

Name ___________________________________________________ Address _________________________________________________
                                                                          Annual
                                                                         Estimate     Jan.      Feb.      Mar.
      CASH INFLOW ITEMS
 1              Livestock:
 2
 3              Crops:
 4
 5
 6            Distributions from cooperatives
 7            Agricultural program payments
 8            Commodity credit loans
 9            Crop insurance proceeds
10            Custom hire
11            Other farm income, gas refunds, etc.
12         TOTAL FARM CASH INFLOW (Add lines 1 through 11)
13            Nonfarm business income and wages
14            Nonfarm dividends and interest
15            Gifts, Inheritance and other nonfarm income
16         TOTAL CASH INFLOW (Except Loans) (Add lines 12 through 15)
           CASH OUTFLOW ITEMS
17            Breeding fees, livestock marketing, and other livestock expense
18            Chemicals—herbicides, insecticides, etc.
19            Conservation expense
20            Custom hire, trucking, freight
21            Feed purchased
22            Fertilizer, lime
23            Gasoline, fuel, oil
24            Insurance
25            1 Interest

26            Labor hired
27            Rent of farm, pasture
28            Repairs, maintenance, other machinery expense
29            Seeds, plants purchased, other crop expense
30            Storage, warehousing
31            Supplies purchased, general
32            Taxes
33            Utilities
34            Veterinary fees, medicine
35            Auto expenses
36            Other farm expenses—Farm organization fees, publications, etc.
37         TOTAL FARM CASH OPERATING EXPENSES (Add lines 17 through 36)
38            Livestock purchases
39            1 Machinery, equipment (cash payments, principal)

40            1 Buildings (cash payments, principal)

41            1 Land purchases (cash payments, principal)

42            TOTAL FARM CASH OUTFLOW (Add lines 37 through 41)
43            Family living expenses
44            State income tax
45            Federal income tax and social security
46            Nonfarm business expenses
47            Other nonfarm and family cash outflow
           TOTAL CASH OUTFLOW (Lines 42 through 47)
48         (Except Operating Loan Payments)
           2 NET CASH FLOW ( + or -) (Line 16 minus line 48)

49         (Except Loan Receipts and Operating Loan Payments)
           3PROJECTED OPERATING LOAN BALANCE

50         (Operating Loan Carried Over From Last Period $__________)                                                     XXXX
51
1. Principal payments on all loans not a part of this operating budget go on lines 39-41 All interest goes on line 25.
2. Add negative “Net Cash Flow” figures of each period to “Projected Operating Loan Balance” of previous period to arrive at “Projected Operating Loan Balance” for each period. Simila
3. The purpose of line 50 is to provide information for estimating the amount of operating borrowings needed in each period. The cash inflow and outflow items above do not include rec
NOTE: To calculate the net cash flow for the farm business alone, subtract line 42 from line l2.
RATING LOAN DETERMINATION

________________                Date ___________________________________
                                                                                                                             Actual
     Apr.             May            June             July            Aug.          Sept.             Oct.    Nov.   Dec.   Cash Flow
             ESTIMATED TOTAL CASH INFLOW
                                                                                                                                         1
                                                                                                                                         2
                                                                                                                                         3
                                                                                                                                         4
                                                                                                                                         5
                                                                                                                                         6
                                                                                                                                         7
                                                                                                                                         8
                                                                                                                                         9
                                                                                                                                        10
                                                                                                                                        11
                                                                                                                                        12
                                                                                                                                        13
                                                                                                                                        14
                                                                                                                                        15
                                                                                                                                        16
            ESTIMATED TOTAL CASH OUTFLOW
                                                                                                                                        17
                                                                                                                                        18
                                                                                                                                        19
                                                                                                                                        20
                                                                                                                                        21
                                                                                                                                        22
                                                                                                                                        23
                                                                                                                                        24
                                                                                                                                        25
                                                                                                                                        26
                                                                                                                                        27
                                                                                                                                        28
                                                                                                                                        29
                                                                                                                                        30
                                                                                                                                        31
                                                                                                                                        32
                                                                                                                                        33
                                                                                                                                        34
                                                                                                                                        35
                                                                                                                                        36
                                                                                                                                        37
                                                                                                                                        38
                                                                                                                                        39
                                                                                                                                        40
                                                                                                                                        41
                                                                                                                                        42
                                                                                                                                        43
                                                                                                                                        44
                                                                                                                                        45
                                                                                                                                        46
                                                                                                                                        47

                                                                                                                                        48

                                                                                                                                        49

                                                                                                                                        50
                                                                                                                                        51

arly, subtract positive “Net Cash Flow” figures from “Projected Operating Loan Balance” of previous period.
ceipt or payment of operating loans.
                                     WORKSHEET FOR CASH FLOW PROJECTION
                            ESTIMATED LIVESTOCK SALES AND PURCHASES AND CROP SALES
   Livestock                                                                                                                                            Sale
     Sales           No.             Total Weight                               Est. Price                           Total Income                       Month

 _______________________________________________________________________________________

 _______________________________________________________________________________________

 _______________________________________________________________________________________

 _______________________________________________________________________________________

 _______________________________________________________________________________________

 _______________________________________________________________________________________

 _______________________________________________________________________________________
  Livestock
  Purchases
 _______________________________________________________________________________________

 _______________________________________________________________________________________

 _______________________________________________________________________________________

 _______________________________________________________________________________________

 _______________________________________________________________________________________

 _______________________________________________________________________________________

 _______________________________________________________________________________________



                         Est.              Total      Rent           Oper.           Held for          Avail.           Est.         Cash                Sale
Crops              Acres Yield             Prod.      Share          Share            Feed            For Sale          Price       Income              Month

 _________________________________________________________________________________________________

 _________________________________________________________________________________________________

 _________________________________________________________________________________________________

 _________________________________________________________________________________________________

 _________________________________________________________________________________________________

 _________________________________________________________________________________________________




               COOPERATIVE EXTENSION SERVICE, MANHATTAN, KANSAS
               MF-275a Revised                                                                                                                           October 1996
               Issued in furtherance of Cooperative Extension Work, acts of May 8 and June 30, 1914, as amended. Kansas State University, County Extension Councils,
               Extension Districts, and United States Department of Agriculture Cooperating, Richard D. Wootton, Associate Director. All educational programs and materials
               available without discrimination on the basis of race, color, national origin, sex, age, or disability.
               File Code: Farm Management 6                                                                                                                    10-96—1.5M

								
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