Case Family Cash Flow Exercise
Animal Science 426
Frank and Francis Case raise crops, cattle and kids in southern Iowa. So far they have been getting along
OK, but they feel like they are going day to day without a real plan for spending. The bank has been
cooperative, but every year the loan officer mentions that having a cash flow budget for the whole year
would help them plan their credit needs better. Can you help them?
Use the Ag Decision Maker (www.extension.iastate.edu/agdm/) Cash Flow Budget tool. Many of the
Case’s numbers are already filled in for you. In order to finish the budget, you will need to fill in some
numbers in the cells in RED. Check the following tabs (sheets) of the spreadsheet:
Livestock
You will need to fill in the expected sale price for the calves. Use your own judgment. Note—the price
should be entered per pound, not per hundredweight.
Crops
You will need to enter the expected bushels of corn and soybeans to sell in each two-month period. Look
in the Crop Summary under Quantity Available. Note that the bushels sold before September cannot
exceed the opening inventory. You should plan to have as many bushels of corn and soybeans left in
closing inventory as you had at the beginning of the year.
Overhead
All information is filled in. Family living expenses are $45,000 per year.
Capital Assets
All information is filled in. They plan to spend $50,000 on new hay equipment in April.
Financing
All information is filled in. All their existing loans are listed. They may have to borrow some money in
April to pay for the haying equipment, up to $40,000 (under New Long-term Loans).
Whole Farm Budget
All of their cash inflows and outflows are automatically entered. You will need to enter values for New
Operating Loans Received and Operating Loans Repaid until you can project a positive Ending Cash
Balance of at least $2,000 for the end of each two-month budgeting period. You may want to go back
and change some of the information above, as well, such as when crops are sold.
Note: their lender has established a maximum outstanding balance on their operating credit line of
$150,000 at any time during the year.
When you are finished, answer the following questions from the Whole Farm Budget sheet.
1. Which period has the largest projected positive cash flow? (row 70)
2. Which period has the largest projected negative cash flow? (row 70)
3. How much operating capital will you have to borrow during the whole year? (row 73)
4. What is the largest outstanding operating loan balance projected for any period during the year?
(row 81)
5. Is your projected operating loan balance at the end of the year larger or smaller than it was at the
beginning of the year? (rows 80, 81)
6. Do you project having more or less corn and soybean inventory at the end of the year compared
to the beginning of the year? (Crops sheets, rows 44, 45)