Using Cash Flow Budgets to Improve Cash Flow and Liquidity in the Catfish Business Carole R. Engle Aquaculture/Fisheries Center U. of Arkansas at Pine Bluff Monthly Cash Flow Budget Item Beginning Cash Receipts from catfish sold Cash Inflow Operating Cash Expenses Fingerlings Feed Gas, Fuel, and Oil Chemicals Labor Harvesting & Hauling Machine Hire Office Expenses Rent Repairs and Maintenance Utilities Other Operating Costs Total Operating Expenses Fixed Cash Expenses Taxes and Insurance Total Fixed cash Expenses Living Expenses Other Expenses Scheduled Debt Paym ents Real Estate Principal Interest (10% APR) Equipment Principal Interest (10% APR) Operating Principal Interest (10% APR) Total Cash Outflow Cash Available New Borrow ing Cash Balance Engle, UAPB Jan 15,849.00 Mar 42,835.71 15,849.00 Feb 39.79 60,000.00 60,039.79 May 46,466.02 Jun 24,256.90 42,835.71 Apr 12,065.73 60,000.00 72,065.73 3,830.00 380.00 1,000.00 717.39 10.00 360.00 1,310.00 190.00 360.00 8,157.39 Aug 34,568.03 24,256.90 Jul 1,145.96 60,000.00 61,145.96 Oct 36,263.66 34,568.03 Sep 5,806.26 60,000.00 65,806.26 46,466.02 4,790.00 470.00 1,000.00 722.79 10.00 360.00 1,310.00 390.00 360.00 9,412.79 12,415.00 5,750.00 570.00 470.00 1,730.00 806.91 10.00 360.00 1,310.00 970.00 360.00 24,751.91 6,710.00 660.00 1,730.00 692.32 10.00 360.00 1,310.00 1,360.00 360.00 13,192.32 7,670.00 750.00 1,730.00 687.24 10.00 360.00 1,310.00 1,560.00 360.00 14,437.24 8,620.00 850.00 470.00 1,950.00 681.21 150.00 10.00 360.00 1,310.00 2,340.00 360.00 17,101.21 10,540.00 1,040.00 1,950.00 695.49 150.00 10.00 360.00 1,310.00 2,530.00 360.00 18,945.49 11,500.00 1,130.00 620.00 1,950.00 754.85 290.00 10.00 360.00 1,310.00 2,730.00 360.00 21,014.85 14,370.00 1,410.00 1,950.00 701.20 150.00 10.00 360.00 1,310.00 2,920.00 360.00 23,541.20 9,580.00 940.00 1,730.00 729.46 10.00 360.00 1,310.00 2,340.00 360.00 17,359.46 3,000.00 - 3,000.00 - 3,000.00 - 4,760.00 4,760.00 3,000.00 - 3,000.00 - 3,000.00 - 3,000.00 - 3,000.00 - 3,000.00 - 3,000.00 - 265.00 2,368.75 2,018.07 15,809.21 39.79 39.79 665.00 2,108.23 2,018.07 17,204.08 42,835.71 42,835.71 1,000.00 2,018.07 30,769.98 12,065.73 12,065.73 265.00 2,364.33 2,018.07 25,599.72 46,466.02 46,466.02 665.00 2,097.14 2,009.73 22,209.11 24,256.90 24,256.90 1,000.00 2,009.73 23,110.94 1,145.96 1,145.96 265.00 2,357.71 2,009.73 26,577.93 34,568.03 34,568.03 665.00 2,080.52 2,001.40 28,761.77 5,806.26 5,806.26 1,000.00 2,001.40 29,542.60 36,263.66 36,263.66 265.00 2,351.08 2,001.40 24,976.94 11,286.72 11,286.72 36,263.66 Cash Flow Scenarios Farm A Farm B Sept. $60,000 Feb. $60,000 Oct. $90,000 April $60,000 Nov. $60,000 July $60,000 Dec. $60,000 Sept. $60,000 Nov. $30,000 Engle, UAPB Liquidity Measures for Two Scenarios Indicator A B Cash Flow Coverage (0.26) 0.17 Debt-Servicing 0.17 0.21 Cash avail./cash (0.02) inflow Cash avail./op. (0.03) expenses Cash avail./liabilities (0.01) Engle, UAPB 0.01 0.02 0.01 Adequate Cash Flow: Determined from Cash Flow Budget • Cash flow budget must show realistic projections of cash revenue for the year, by month. • Any month with a negative cash flow is a cash flow problem that needs to be resolved. • Must identify a production/financial plan that generates the revenue when needed. • If there is a problem, may need to sell off some stock, reduce densities, allow for better growth = better cash flow. Engle, UAPB • Decisions on stocking and feeding rates should be based on meeting short-term financial obligations. Engle, UAPB What should I look at this winter? • Do detailed cash flow budget and know when you need to make payments. • Using Fishy, project different harvest dates at different stocking & feeding rates. • Choose feeding and stocking rates that allow farmer to make necessary payments. Engle, UAPB Larger fish at stocking reach harvest in shorter time period. May Engle, UAPB June July August Sept. Oct. Fish grow faster at lower densities. Engle, UAPB Cash Flow Simulator: Files available in training materials on web site. Engle, UAPB