1. Management Information Systems
Terry DeGroff
Burwell, Nebraska
Books, Records & Controls

2. Management is…
Planning, organizing, directing, and controlling a business. The most important and challenging is control… the process of analyzing, evaluating and interpreting the production and financial performance of a business.

3. Information…
Can and does come from many sources. Some of the best and most needed information can come from each business’ own financial and production records.

4. Systems…
Need to be implemented that allow for only necessary record keeping and effective use of records. Summary information from these records should be invaluable in day to day business decisions.

5. Management
Planning
Organizing
Directing
Controlling

6. Management Control
The Best Decisions Require the Best Information

7. Uses and Purposes of Financial Records
Management
Decision
Making
Income Tax
Reporting
Credit
Acquisition

8. Keys to Successful Record Keeping

9. Keys to Successful Record Keeping
Simple yet Useful

10. Keys to Successful Record Keeping
Excessive detail often ends in Confusion, Frustration, and Failure

11. Keys to Successful Record Keeping
Meet your Needs, Abilities, & Limitations

12. Keys to Successful Record Keeping
Know your Purpose for Keeping Records
Management
Income
Taxes
Banking

13. Accounting Rules
Standards of Communication

14. Accounting Rules
Generally Accepted Accounting Principles
(GAAP)

15. Keys to Successful Record Keeping
Accurately Match Expenses with Income

16. Cash and Accrual Accounting
Refers to the timing of entries into the accounting system

17. Cash Based Records
Transactions are recorded when cash is received or paid out

18. Accrual Based Records Transactions are recorded when they take place
Regardless of whether cash is involved

19. Accrual Adjusted Statements
Cash based records are kept throughout the year
Non-Cash adjustments are made to the cash based income statement at the end of the year

20. Accrual Adjusted Income Statement
Cash incomes and expenses must be adjusted by:
Changes in non-cash assets
Inventories
Pre paid expenses
Receivables
Changes in non-cash liabilities
Payables
Accrued interest

21. Financial Analysis
Requires
Basic Set of Financial Statements

22. Basic Financial Statements
Balance Sheet
Income Statement
Statement of Owner Equity
Statement of Cash Flows

23. Assets = Liabilities + Equity
Equity = Assets - Liabilities

24. Beginning Balance Sheet + Capital contributions
Ending Balance Sheet
Assets
Liabilities
Assets
Liabilities
Equity
Equity
+/- Net Income
+/- Valuation Changes
Capital withdrawals
+ Capital contributions

25. Financial Analysis Requires Basic Set of Financial Statements
Understanding of how to Analyze and Interpret the Financial Statements

26. Ratio Analysis Liquidity Solvency Profitability Financial Efficiency
Repayment Capacity

27. Financial Analysis
Objectives
Measure Financial Condition

28. Financial Analysis Objectives Measure Financial Condition
Measure Financial Performance

29. Financial Analysis
All business owners should have a basic set of financial statements at their disposal and they should know how to analyze and interpret them.

30. Profitable Management of the “Extensive” Enterprise
Forage-based cow/calf production has long represented a management paradox. Very high investment requirements per dollar of output provides a strong incentive to increase output per head (thereby reducing investment per dollar of output). Unfortunately, this ever-so-tempting objective has been regularly frustrated by the low economic responsiveness to performance enhancing technology. In short, it simple has not paid to manage beef cows or perennial grass with the same “intensity” as we do with more intensive enterprises like dairy cows, hogs, and row crops.

31. Profitable Management of the “Extensive” Enterprise
In extensive enterprises (such as the commercial cow/calf business), we seldom find it profitable to maximize yield per acre or performance per animal. Rather than “pouring on the technology”, we must recognize the nature of the brute, live harmoniously with nature, and make a very discriminating use of yield or performance-enhancing technology. In brief---we generally have to finesse a profit.

32. Profitable Management of the “Extensive” Enterprise
Output maximization may approximate optimal management for intensive enterprises. However, optimal management of the extensive enterprise comes closer to input minimization.
V.E. Jacobs, 1984

33. A Paradox
Farmers believe they benefit from agricultural technology…but they don’t
Consumers don’t believe they benefit…but they do

34. Technology is…. Productivity enhancing Management intensive
Capital intensive
Not scale neutral

35. The End