Cash Flow Damona Doye OSU Extension Economist damona

Cash Flow Damona Doye OSU Extension Economist damona. doye@okstate. edu 405 -744 -9836

Financial Statements AGEC 751 Cash flow statement Income statement • Cash income • Cash expenses • Changes in assets AGEC 791 792 752 Balance sheet • Changes in liabilities • Assets • Net farm income, accrual adjusted (profit) • Liabilities • Net worth (owner equity) http: //pods. dasnr. okstate. edu/docushare/ AGEC 753

Cash Flow Discussion n Statement versus plan, business versus personal n Sources of information n Cash flow statement development n Uses of cash flow statement or plan n Relationship to other financial statements

Sources of Information n Records, records q Receipts, bills, invoices, etc. q Account statements q Transaction logs q Computer files

Cash Flow Statement Cash Inflows n Operating receipts q Crop and livestock sales, government payments, other farm income n Capital sales n Contributed capital Cash Outflows n Operating expenses (feed, fertilizer, etc. ) n Capital purchases n Family living and other withdrawals

Quicken Reports and Graphs n n n n Cash flow Tax schedule Transactions Account balances Comparison Filtered Memorized Balance sheet

Uses of a Cash Flow Statement n Establishes target levels for income and expenses which can be used in monitoring progress towards goals q Budget q Break even analysis n Points out potential problems in meeting financial obligations n Indicates when cash is available for new investments n Risk assessment

Measuring Financial Position and Performance n Liquidity q Ability to pay bills as they come due and cover unanticipated events n Solvency q Ability to cover all debts if the business were sold n Profitability q Returns to labor and management generated by the operation n Financial efficiency q Efficiency with which assets generate income n Repayment capacity q Ability to repay term debt in a timely fashion

Financial Statements AGEC 751 Cash flow statement Income statement • Cash income • Cash expenses • Changes in assets AGEC 791 792 752 Balance sheet • Changes in liabilities • Assets • Net farm income, accrual adjusted (profit) • Liabilities • Net worth (owner equity) http: //pods. dasnr. okstate. edu/docushare/ AGEC 753

Difference Between Cash Flow and Income Statement Cash flow statement does not include: n Depreciation n Changes in inventory, other accrual adjustments n Gains/losses on capital asset sales Income statement does not include: n Capital sales and contributed capital n Principal payments n Family living expenses

References n At osufacts. okstate. edu: q Developing a Cash Flow Plan, AGEC-751 q From Cash Records to Cost of Production, AGEC-242 q Budgets: Their Use in Farm Management, AGEC-139 q Quicken for Farm and Ranch Financial Records, CR 324 q Quicken or Quick. Books: What’s the Best Choice for Agricultural Producers? AGEC-266 q Information Systems for Oklahoma Farmers, AGEC 302 n FINPACK, https: //www. cffm. umn. edu/FINPACK/