Farm Financial Statements

Farm Financial Statements
Ag Decision Maker
File C3-56
The fi nancial position and performance of a farm Statement of Cash Flows—Summarizes all the sources
business can be summarized by four important
and uses of cash by the business during a period of time.
fi nancial statements. The relationship of these
Statement of Owner Equity—Shows how net worth
statements is illustrated below. Information from these
grew from the beginning to the end of the year.
statements can be used:
Forms for preparing each of these statements are found
• to make important fi nancing and investment
in this bulletin. Several supplemental schedules also are
decisions
provided, where assets and liabilities can be listed, and
•to substantiate credit applications
subtotals of their values carried forward to the statements.
•to derive performance measures for analyzing the farm
Most of the information can be taken from the same
business
sources used to prepare your income tax return, plus a
listing of assets.
•to develop budgets for planning purposes
More detailed information can be found in the following
The major statements and their purposes are as follows:
Iowa State University Extension publications:
Net Worth Statement—Summarizes the property and
•Your Net Worth Statement (FM 1791/AgDM C3-20)
fi nancial assets owned, the debts owed, and the net worth
of the business at a point in time.
•Your Farm Income Statement (FM 1816/AgDM C3-25)
Net Income Statement—Summarizes the income
•Twelve Steps to Cash Flow Budgeting (FM 1792/
generated, the expenses incurred, and the net income
AgDM C3-15)
earned by the business during a period of time.
•Financial Performance Measures for Iowa Farms (FM
1845/AgDM C3-55)
Relationship of the four major fi nancial statements
Statement of Cash Flows (cash in, cash out)
Beginning Net
Ending Net Worth
Worth Statement
Net Income Statement (income and expenses)
Statement
{
(assets and
(assets and
liabilities)
liabilities)
Statement of Owner Equity (change in net worth)
Accounting Year
. . . and justice for all
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SW, Washington, DC 20250-9410 or call 202-
William Edwards, extension economist
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sion work, Acts of May 8 and June 30, 1914,
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orientation, and marital or family status. (Not all
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prohibited bases apply to all programs.) Many mate-
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Agriculture. Jack M. Payne, director, Coopera-
rials can be made available in alternative formats for
tive Extension Service, Iowa State University of
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File: Economics 1 - 1
FM-1824 Revised November 2008

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Page 2
Farm Financial Statements
Net Worth Statement
Name






Date




Farm Assets
Cost
Market
Farm Liabilities
Market
Value
Value
Value
Checking and savings accounts
Accounts payable (Sched. N)
Crops held for sale/feed (Sched. A)
Farm taxes due (Sched. O)
Investment in growing crops(Sch. B)
Current notes and credit lines (Sched. P)
Commercial feed on hand (Sch. C)
Accrued interest - short (Sched. P)
Prepaid expenses (Sched. D)

- fi xed (Sched. Q)
Market livestock (Sched. E)

Supplies on hand (Sched. F)
Due in 12 months - fi xed (Sched. Q)
Accounts receivable (Sched. G)

Other current assets
Other current liabilities



a. Total Current Assets
b. Total Current Liabilities
Unpaid co-op. distributions(Sch. H)
Notes and contracts, remainder (Sched. Q)
Breeding livestock (Sched. I)
- Machinery

Machinery & equipment (Sched. J)
- Land

Buildings/improvements (Sched. K)
- Other fi xed assets

Farmland (Sched. L)


Farm securities, certifi cates(Sch. M)


Other fi xed assets
Other fi xed liabilities

Total Fixed Assets
Total Fixed Liabilities
c. Total Farm Assets
d. Total Farm Liabilities


e. Farm Net Worth (c - d)
Working Capital (a - b)


f. Farm Net Worth Last Year
Current Asset-to-Debt Ratio (a / b)


g. Change in Farm Net Worth (e - f)
Total Debt-to-Asset Ratio (d / c)
Personal Assets
Personal Liabilities
Bank accounts, cash, savings
Credit card, charge accounts, other loans
Automobiles, boats, etc.
Automobile loans
Household goods, clothing
Accounts payable, taxes due
Stocks, bonds, etc.
Other loans
Real estate
Real estate, other long-term loans
h. Total Personal Assets
i. Total Personal Liabilities
j. Total Personal Net Worth (h - i)

k. Total Net Worth, Market Value (e + j)
Personal Debt-to-Asset Ratio (i / h)

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Farm Financial Statements
Page 3
Net Farm Income Statement
Name






Year




Income
Cash Income
Income Adjustments
Ending
Beginning
Sales of livestock bought for resale
Crops held for sale or feed (Sched. A)
Sales of raised livestock, grain, etc.
Market livestock (Sched. E)
Cooperative distributions paid
Accounts receivable (Sched. G)
Agricultural program payments
Unpaid co-op. distributions (Sched. H)
Crop insurance proceeds
Breeding livestock (Sched. I)
Custom hire income
Subtotal of Adjustments
Other cash income
b. Net adjustment (ending - beginning)
Sales of breeding livestock
c. Value of Home Used Production
a. Total Cash Income
d. Gross Farm Revenue (a + b + c)
Expenses
Cash Expenses
Expense Adjustments
Beginning
Ending
Car and truck expenses
Investment in growing crops (Sched. B)
Chemicals
Commercial feed on hand (Sched. C)
Conservation expenses
Prepaid expenses (Sched. D)
Custom hire
Supplies on hand (Sched. F)
Employee benefi ts
f. Net adjustment (beginning - ending)
Feed purchased
Ending
Beginning
Fertilizer and lime
Accounts payable (Sched. N)
Freight, trucking
Farm taxes due (Sched. O)
Gasoline, fuel, oil
Accrued interest (Sched. P, Q)
Insurance
g. Net adjustment (ending - beginning)
Interest paid
h. Depreciation (Sched. J, K)
Labor hired
i. Gross Farm Expenses (e + f + g + h)
Pension and profi t-share plans
Rent or lease payments
j. Net Farm Income From Operations (d - i)
Repairs, maintenance
Seeds, plants
k. Sales of Farm Capital Assets
Storage, warehousing
l. Cost Value of Items Sold (Sched. J, K, L)
Supplies purchased
m. Capital Gains or Losses (k - l)
Taxes (farm)
Utilities
Vet. fees, medicine, breeding
Other cash expenses
Livestock purchased
e. Total Cash Expenses
n. Net Farm Income (j + m)

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Page 4
Farm Financial Statements
Statement of Cash Flows
Name__________________________________________________________________
Year _____________________________
Cash In
Cash Out
Cash farm income and expenses (operating)
Total cash income (line a, net farm income statement)
xxx
Total cash expenses (line e, net farm income statement)
xxx
Capital assets (investing)
Sales of capital assets (line k, net farm income statement)

xxx
Cost of purchases and trades (sched. J, K, L)
xxx
Loans (fi nancing)
New loans received
xxx
Principal paid on loans
xxx
Nonfarm (withdrawals)
Nonfarm income (wages, rents, interest, etc.)
xxx
Nonfarm expenditures (family living, income tax, retirement accts, etc.)
xxx
Cash on hand (farm cash, checking, savings)
Beginning of year (farm net worth statement)
xxx
End of year (farm net worth statement)
xxx
Total of cash in and cash out*
*If all cash transactions are included correctly, the totals for the two columns will be approximately equal.
Statement of Owner Equity
Name__________________________________________________________________
Year ___________________________
Cost Value
Market Value
a. Farm net worth, beginning of year
(Line e, beginning net worth statement)
b. Change in market value of capital assets (net of depreciation)
xxx
(Line g, ending net worth statement, market value _____________ minus cost value _____________)
c. Net farm income
(Line n, net farm income statement)
same value for cost and market
d. Net nonfarm withdrawals
nonfarm income (statement of cash fl ows) _____________
same value for cost and market
minus nonfarm expenditures (statement of cash fl ows) _____________
minus home used production (line c. net farm income statement) _____________
Sum of lines a, b, c, and d (should be approximately equal to line e)
e. Farm net worth, end of year
(Line e, ending net worth statement)

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Farm Financial Statements
Page 5
Farm Financial Statements - Supporting Schedules
Schedule A. Crops Held for Sale or Feed
Description
Quantity
Unit
Price
Value
Total
xxx
xxx
xxx
Schedule B. Investment in Growing Crops
Description
Acres
$/acre
Value
Total
xxx
Schedule C. Commercial Feed on Hand
Description/Species
Quantity
Unit
Price
Value
Total
xxx
xxx
xxx
Schedule D. Prepaid Expenses
Description
Quantity
Unit
Price
Value

xxx
xxx
xxx

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Page 6
Farm Financial Statements
Schedule E. Market Livestock
Average
Total
Price per
Description
Number
Value
Weight (lbs.) Weight (lbs.)
Pound
Total
xxx
xxx
xxx
xxx
Schedule F. Supplies on Hand
Description
Quantity
Unit
Price
Value
Total
xxx
xxx
xxx
Schedule G. Accounts Receivable
Schedule H. Unpaid Cooperative Distributions
Description
Value
Description
Value

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Farm Financial Statements
Page 7
Schedule I. Breeding Livestock
Price per
Description
Number
Value
Head
Total
xxx
Schedule J. Machinery and Equipment
(a)
(b)
(c)
(d)
New
Market
Previous
Cost of
Deprecia-
Cost
Cost
Description (items can be aggregated)
Value
Cost
Purchases
tion
Value of
Value
(estimate)
Value
and Trades
(rate =
Items Sold
(a+b-c-d)
Total
* suggest 10% of previous cost value
Schedule K. Buildings and Improvements
(a)
(b)
(c)
(d)
New
Market
Previous
Cost of
Deprecia-
Cost
Cost
Description (items can be aggregated)
Value
Cost
Purchases
tion
Value of
Value
(estimate)
Value
and Trades
(rate =
Items Sold
(a+b-c-d)
Total
* suggest 5% of previous cost value
Schedule L. Farmland
(a)
(b)
(c)
New
Market
Total
Number of
Previous
Cost of
Cost
Cost
Description
Value
Market
Acres
Cost
New
Value of
Value
per Acre
Value
Value
Purchases
Land Sold
(a+b-c)
Total

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Page 8
Farm Financial Statements
Schedule M. Securities and Certifi cates
Description
Value
Description
Value
Total
Total
Schedule N. Accounts Payable
Schedule O. Farm Taxes Due
Description
Value
Description
Value
Total
Total
Schedule P. Current Notes and Credit Lines
Date loan rcd.
Interest
Balance
Accrued
Source and Purpose
or last pay-
Rate
Owed
Interest
ment made
Total
xxx
xxx
Schedule Q. Fixed Notes and Contracts
Principal due
Interest
Date of Last
Balance
Principal due,
Accrued
Source and Purpose
beyond 12
Rate
Payment
Owed
next 12 mos.
Interest
mos.
Total
xxx
xxx

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