Bankrupt or Billionaire: What’s the Business Financial Position? Balance Sheet Basics

Balance Sheet Components zAssets - items owned yCurrent, non-current assets zLiabilities - items owed yCurrent, non-current liabilities zOwner equity or net worth yContributed capital, retained earnings, valuation equity

Should you...? zInclude personal assets and liabilities on the farm balance sheet?

Current Assets zCash, checking accounts, savings zInvestments zAccounts receivable zPrepaid expenses zCash investments in growing groups zInventories yMarket livestock, stored crops, purchased feed, supplies

What values do you use? zMarket value zCost basis

Non-Current Assets zBreeding livestock zMachinery, equipment zVehicles zInvestments in capital leases zLand zBuildings and improvements

Current Liabilities zAccounts payable zNotes payable zCurrent portion of term debt zAccrued interest zTaxes payable zDeferred taxes

Non-current Liabilities zNotes payable, non-real estate zNotes payable, real estate zDeferred taxes

Changes in the balance sheet: What do they tell you? zAre you better off at the end of the year??? yLook at the change in assets relative to change in liabilities yDid owner equity increase? Contributed capital, retained earnings, valuation equity zValuation technique matters!

True or False? zA complete business analysis and balance sheet can be developed without an inventory of assets and liabilities.