Finances in the Animal Science Industry

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Finances in the Animal
Science Industry
What kinds of records should
businesses keep?
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Assets
Liabilities
Net worth
Profit and loss statement
Cash receipts
Non-cash receipts
Invoice
Assets
• Things that one owns and completely
pays for
• Tangible in value
– Example: A car after all payments have been
made.
• Two types of assets
– Current and non-current
Assets
Current Assets
• Items quickly converted to cash or that will be
sold within 12 months
– cash
– checking
– savings
– stocks or bonds
– non-depreciable inventory of crops and
livestock
Assets
Non-current Assets
• Items that have a useful life or more than
one year
– land
– machinery
– breeding livestock
Liabilities
• Things that you owe money to other people
for or debts
– Example: credit cards
Liabilities
• Current-debts that are due to be paid this
year
– fertilizer and feed bills
– tractor and building payments
– part of the mortgage due this year
• Non-Current-debts not due this year
– mortgages not due this year
Net Worth
• Total assets minus total liabilities.
• Current Assets + Non-Current Assets=Total
Assets
• Current Liabilities + Non-Current
Liabilities=Total Liabilities
Inventory
• An itemized list of things owned by a
business with the beginning value and
depreciated value
• Two types of inventory
– Non-depreciable
– Depreciable
Inventory
• Non-depreciable-items that will be used or
sold within a year
– feed
– supplies
• Depreciable-items that have a useful life of
more than one year and lose value because
of age, wear or becoming out-of date
because of technology advancements.
Inventory
• Land is NOT depreciable property
• Depreciable property examples:
– tractor
– computer
– chainsaw
Profit and Loss Statement
• A financial
statement of a
business that
reports the
profit made by
the business or
the losses
incurred.
Receipts
• Cash Receipts
– Cash that is paid for services or merchandise.
• Non-Cash Receipts
– Payment for services in other ways than cash.
• Food
• Services
• Gifts
Invoice
• Shows items and
prices for things
that have been
bought from a
certain business.
Debt-to-Equity Ratio
• Used by banks and lending institutions to
decide whether or not to lend money to
specific people or businesses
Debt-to-Equity Ratio =
Total Liability
Net Worth
Pop Quiz
1. If a beef farmer has 200 head of cow
valued at $400 each, 20 tons of feed worth
$200 per ton, 2 tractors worth $50,000
each, a manure spreader worth $4,000,
and 10 acres of land worth $5,000 per
acre, what amount should be entered on
the total value of non-depreciable items
line of the inventory page?
Pop Quiz
2. A swine farmer has current assets listed at
$30,000 and non-current assets listed at
$150,000, he also has current liabilities
listed at $10,000 and non-current
liabilities listed at $50,000. Calculated the
farmer’s net worth.
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