If time could turn the clock back in 2010 you most want to do that? Maybe a lot of people would say into the stock market, investment funds or real estate investment. However, if fleeting wealth accumulation opportunities, beginning in the new year, is more important is effective for annual financial planning, "money begets money" basis.
Farm Financial Planning and Analysis FINPACK, the most recognized name in agricultural software, will help you evaluate a farm’s financial position, explore alternatives, and make informed business decisions. Producers, lenders, educators, and agricultural professionals world-wide have made FINPACK their tool of choice for farm planning and credit analysis. With FINPACK you can quickly and easily develop: $ Balance Sheets $ Business Analysis -- FINAN $ Monthly Cash Flow Plans -- FINFLO $ Annual Cash Flow Plans -- Annual Plan $ Long Range “What if?” Plans -- FINLRB $ Historic Trend Reports FINPACK’s Balance Sheet allows assets to be valued at cost, market or both. Print balance sheets with or without detailed schedules. Funnel data directly into your plans and analyses. FINAN takes an in-depth look at a farm’s financial strengths and weaknesses. Develop accrual income statements, statements of cash flow, and statements of owner’s equity. Measure the operation’s profitability, liquidity, solvency, and efficiency. Use the optional enterprise analysis to examine each crop and livestock enterprise’s contribution to the operation’s profitability. FINFLO projects cash flows for next year or for several years. Project monthly revenue, expense, debt repayment and operating credit requirements. Develop pro-forma balance sheets and income statements. The Annual Plan projects a single year cash flow in an annual format. It can be used in lieu of FINFLO for those plans that do not require a monthly cash flow projection. FINLRB, FINPACK’s “What if” tool, helps you strategically position the operation to meet tomorrow’s challenges. Use it to compare the financial feasibility of alternative farm plans, side by side. FINPACK’s Historic Database allows you to develop customized historical reports for the farm. Evaluate financial and production trends, spread balance sheets, and document livestock and crop performance. FINPACK for Lenders includes five more components especially for credit analysis: $ Collateral Analysis $ Risk Rating $ An FSA Forms component to automatically complete FSA guarantee applications within FINPACK $ Earned Net Worth Analysis $ A Presentation Manager that puts it all together into a loan committee ready package For more information: Center for Farm Financial Management University of Minnesota (612) 625-1964 or (800) 234-1111 Web: www.cffm.umn.edu Sample Sections of FINPACK Output FINLRB Profitability Measures PROFITABILITY MEASURES (Market) Base Plan Alt. 1 Alt. 2 Net farm income (D) 43,387 54,918 64,842 Labor & management earnings (D-E) 1,177 13,728 23,063 Rate of return on farm assets (H/I) 3.1 % 4.6 % 5.3 % Rate of return on farm equity (J/K) 2.0 % 3.1 % 4.4 % Rate of return on added investment (L/M) 14.1 % 15.5 % Operating profit margin (H/N) 16.1 % 20.7 % 23.7 % Asset turnover (N/I) 19.4 % 22.5 % 22.3 % (E) Interest on farm net worth (K* 6%) 42,210 41,190 41,779 (F) Farm interest paid 25,345 44,688 49,018 (G) Value operators labor & mgt 29,617 33,500 34,281 (H) Return on farm assets (D+F-G) 39,115 66,106 79,579 (I) Total farm assets 1,250,345 1,425,345 1,504,595 (J) Return on farm equity (D-G) 13,770 21,418 30,561 (K) Total farm net worth 703,503 686,503 696,313 (L) Added return to added investment 26,991 40,463 (M) Added capital invested 192,OOO 261,440 (N) Value of farm production 242,342 319,996 335,624 Annual Operating Loan Section of FINFLO (Partial Year) ANNUAL OPERATING LOAN TRANSACTIONS & BALANCES Jun Jul Aug Sep Oct Nov Dec Total Beg AO bal 23158 36460 41008 62948 65239 43618 20483 23158 AO borrowing 36460 4548 21939 2291 - - 15510 80749 AO int. pay - - - - 1585 336 158 2534 AO prin. pay - - - - 21620 23135 - 67913 End AO bal. 36460 41008 62948 65239 43618 20483 35994 35994 Accrued int. - 281 597 1082 - - - - End cash bal 1000 1000 1000 1000 1000 1000 1000 1000 FINAN Farm Financial Guidelines Ratios FINANCIAL STANDARDS MEASURES LIQUIDITY Begin End Current ratio 2.93 2.30 Working capital 109,585 104,294 SOLVENCY (Market) Begin End Farm debt to asset ratio 43 % 53 % Farm equity to asset ratio 57 % 47 % Farm debt to equity ratio 76 % 115 % PROFITABILITY Cost Market Rate of return on farm asset 7.7 % 3.7 % Rate of return on farm equity 5.9 % 1.2 % Operating profit margin 24.9 % 16.7 % Net farm income 63,542 38,284 REPAYMENT CAPACITY Cash Accrual Term debt coverage ratio 145 % 188 % Capital replacement margin 21,185 40,990 EFFICIENCY Asset turnover rate (market) 22.5 % Operating expense ratio 61.9 % Depreciation expense ratio 9.6 % Interest expense ratio 11.5 % Net farm income ratio 17.0 %
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