Farm Financial Planning and Analysis

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					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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Description: 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.