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Computerized Decision Aids

Public & Private Partnership Understanding Agriculture's Risk
Funded by: USDA Risk Management Education Initiative
Cooperative State Research Education and Extension Service
USDA Risk Management Agency
Commodity Futures Trading Commission
USDA Office of Outreach

Learning materials and decision tools for Agricultural Risk Management:
Managing Financial, Production, and Price Risk.

"Available to Download"

Chapter 8

Table of Contents

1. Profit Farms

2. Financial Statement Analysis

3. Projected Whole Farm Cash Flow and Enterprise Budgets

4. Balance Sheet 12/31/X1

5. Balance Sheet 12/31/X2

6. Balance Sheet Supporting Schedules 12/31/X2

7. Income Statement Year Ending 12/31/X2

8. Income Statement Supporting Schedules Year Ending 12/31/X2

9. Statement of Owner Equity Year Ending 12/31/X2

10. Statement of Cash Flows Year Ending 12/31/X2

11. Financial Analysis Summary Year Ending 12/31/X2 [Market Values]

12. Trend Analysis Year Ending 12/31/X2 [Market Values]

13. Cash Flow Budget Year Ending 12/31/X3

14. Projected Economic Costs for Winter Wheat and Summer Fallow Crop Year X3

15. Projected Cash Expenditures for Winter Wheat and Summer Fallow Crop Year X3

16. Projected Economic Costs for Spring Barley Crop Year X3

17. Projected Cash Expenditures for Spring Barley Crop Year X3

18. Whole Farm Cash Flow Crop Year X3

Profit Farms is a 1,500-acre dryland grain operation located in the Pacific Northwest. The farm is operated by Max and Marlene Profit. The Profits are both 45 years old, have been married 24 years, and have three children–two sons, ages 22 and 15, and a daughter, age 16. The oldest son is a recent graduate of State University and is employed off the farm. Marlene is a part-time teacher at the nearby elementary school.

The farm includes three adjacent properties. Max and Marlene own the home place (825 acres) and the Peterson place (375 acres). The home place was originally owned by Max’s parents, but was willed to Max upon their untimely deaths 15 years ago. The Profits purchased the Peterson place eight years ago and used a Farm Credit loan to help finance the acquisition. The third tract (300 acres) is leased on a crop-share basis with the Profits getting two-thirds of the crop and paying two-thirds of the fertilizer and crop insurance costs and 100 percent of all the remaining operating outlays. A rotation of 500 acres of soft white winter wheat, 500 acres of spring barley, and 500 acres of summer fallow is followed annually. Winter wheat yields have ranged between 37 and 82 bushels per acre
over the past 10 years and have averaged about 62 bushels during that period (see Table 1). Barley yields have varied between 2.1 and .7 tons per acre and averaged 1.3 tons (54.2 bushels) over the past 10 years.