1. Mary Sobba Agriculture Business Specialist Farming, Women and Money

2. Objectives Keep good records Constructing financial statements Understanding financial statements

3. Financial Records It is too hard What do I know about farming I am not an accountant Schedule F is hard enough for me Someone else keeps the books and it is not my responsibility. There is not enough time.

4. Take Action Make sure you have a set place to work on records (preferably not the kitchen table.) Set aside a little time and get in a routine

5. Regular financial duties Paying bills and payroll Writing correspondence Scheduling when money comes in and goes out. Reviewing debt obligations Paying debt Depositing money Allocating money to investments, operating accounts, checking accounts, etc. Reconcile checkbook (important way to find errors)

6. Financial Statements 1.Balance Sheet 2.Cash Flow 3.Income Statement

7. Key Financial Terms Balance Sheet-A statement of financial position that shows the assets, liabilities, and net worth of the business at any one given point in time. Assets-Everything that the business owns, including such items as cash, inventory, prepaid expenses, and equipment..

8. Key Financial Terms Current Assets-What the business owns that is expected to be turned into cash within one year- such as accounts receivable and inventory Non Current Intermediate Assets-What the business owns that has a moderate length of life of over 1 year but not more than 7 in most cases. Fixed Assets-Assets that are used to generate revenue for the business such as buildings, machinery and land..

9. Key Financial Terms Depreciation-The process of allocating the cost of a fixed asset (such as equipment) to the period that it benefits the business-“writing off” its cost over its “useful” life. Not a cash expenditure. Liabilities-What the business owes to creditors and to the people who supply funds that must be repaid. Debt is used to describe an ongoing liability, such as a bank loan.

10. Key Financial Terms Current Liabilities-Obligations which are due to be repaid within one year. Non-Current Intermediate Liabilities- Obligations that are due to be paid longer than one year but usually within 3-7 years. Long-Term Liabilities-Obligations that are scheduled to be repaid in a period greater than 7 years. This is also referred to as Long-Term Debt.

11. Key Financial Terms Owners Equity-The value of the owners in the assets of the business. The equity of the owners is the assets less the liabilities. This is also called Net Worth. Net Profit-The amount remaining after deducting all costs of doing business.

12. Key Financial Terms Gross Profit - Sales minus the Cost of Goods Sold, which is the cost of purchasing or producing the goods sold during that accounting period. Income Statement-The summary of the revenues, costs, and expenses of a company that are recognized during an accounting period. Also, frequently called a profit and loss statement, P & L, or income and expense statement

13. Balance Sheet A Balance Sheet is a snapshot of how funds are invested in a business (assets) and the financing methods used (liabilities and owner’s equity) at any one given point in time Typically, done at the same time each year.

14. Balance Sheet AssetsLiabilities Current _____Current _____Non Current Intermediate _____Intermediate _____ Long Term _____Long Term _____ Total Assets _____Net Worth _____

15. Income Statement Gross Cash Income _______ Cash Operating Expense(-) _______ Net Cash Income(=)_______ Inventory Changes (+ or -)_______ Depreciation(-)_______ Net Farm Income (=)_______

16. Cash Flow 1.Monthly 2.Projections and Actual 3.Can you meet financial obligations in a timely fashion? 4.What is generating income?

17. Income Statement 1.Did you make money 2.Projections and Actual 3.Can you meet financial obligations in a timely fashion? 4.What is generating income?

18. Questions? Mary Sobba (573) 581-3231 sobbam@missouri.edu