Financial Analysis
Note Taking Guide
Leanne Brown
Net Worth Statement
•(Balance Sheet)
•________________________________________________________
•Net Worth (Owner's equity)
Current Assets
 can be converted to _____________ in less than ___________________
o checking/savings
o money owed you
o inventory for sale
o stocks, bonds, life insurance
Intermediate Assets
 resources or production items with a life _____________________________
o equipment
o machinery
o breeding livestock
o generally depreciable
Fixed Assets
 (long term) ____________________ items :
o real estate
o improvements on buildings
Current Liabilities
 debts due within ______________________
o bank notes
o accounts payable
o rent, taxes, interest
Intermediate Liabilities
•
non real estate debt of 1 to 10 years
Long-Term Liabilities
•
Mortgages and land contracts on real estate ________________________________________________
Financial Tools
• _____________________ ____________________ - compare statements from one year to another
• _____________________ ____________________- compare statements to expected statements
• _____________________ ____________________ - compare statements to another farm
Financial Terms
 __________________ - ability to generate cash
 ________________ _______________________ = Current Assets / Current Liabilities
 ________________ _______________________ = (CA + IA) / (CL + IL)
 ________________ - if assets exceed liability
o Net Capital Ratio
o Debt-Equity Ratio
Ratios
•
•
_________________________________ = Total Assets / Total Liabilities
_________________________________ = Total Liabilities / Owners Equity
Terms
 _________________________________ (Profit / Loss Statement)
o list receipts and expenses
 _________________________________ - money received from sales during year
o all incomes
 _________________________________ - money paid to operate a business
 _________________________________ = Gross Receipts - Expenses
 _________________________________
o Expenses ____________________
o ________________ Expenses
o ______________________________________________
o Products grown & used at home
 _______________________________ = Net ______________ income + _____________ adjustments
Ratios
 __________________________________ = Total Operating Expenses / Gross Income
o relates amount of ___________________ spent on operating expenses
 ______________________________ = Fixed Expenses / Gross Income
o relates amount of gross income spent on fixed expenses
 ______________________________ = Total Expenses / Gross Income
o relates amount of gross income spent on all expenses
Even More Terms
 _________________ = (Unadjusted Gross Income + Non-cash Adjustment)/ Average Capitol
Investment or (Total Assets)
 _________________ rates mean a greater chance of ____________________ or a quicker turnover of
money invested
 __________% per year is good

__________________________ = Net Farm Income - Operator Labor Allowance
o amount of income for your labor
Return to Equity Capital
• ________________________________ =Net Farm Income+Interest Paid-Operator Allowance
--------------------------------Return to Total Capital
• _____________________________________ = Return to Equity Capital / Avg Net Worth
Return to Equity Capital
• Compare this rate to the cost of borrowing money
• if interest rate is _______________, it may be ___________________ to borrow money
• if interest rate is higher, _______________________ borrow money