Returns
The government report that shows supply and demand of agricultural product is:
WASDE
unit/enterprise or year
True/False. The cash flow statement measures profitability.
False
any twelve month period beginning on a day other than January 1st
fiscal year
non-cash expense that is the decrease in asset value due to age, use, or obsolescence
depreciation
index of the relative suitability of that soil for crops that are typically grown on it
Productivity Index
In the long run all costs are ________________
Variable
What is one thing that does NOT show up on the cash flow statement but is on the income statement?
Depreciation, accounts payable, accounts recievable
What is the basic account equation?
Assets = liabilities + equity
when you receive payment in the form of stuff, not money
payment in kind
The change in output that results when you add one more increment of an input
Marginal Change
budget that looks at all revenue and costs associated with one single part of of the business
Enterprise
Revolving Line of Credit
A business is solvent when:
Assets > Liabilities
analyzing whether cash inflows will be sufficient to meet expected outflows
Liquidity analysis
You should keep adding extra units of input when:
marginal revenue > marginal cost
How are expenses like machinery depreciation and machinery interest split between enterprises? (two ways)
Pro-rate by acres or revenue
Budgeting measures _____________ and _____________________
Feasibility and profitability
What are the two reasons an asset has value?
–Can be sold to generate cash
–Can be used to produce something that will be sold for cash
The part of every dollar of revenue that ends up as profit
Operating Profit Margin
As additional units of a variable input are used in combination with a fixed input, the marginal physical product will eventually decline
A formal and consistent method for calculating the expected change in profit from a proposed change in the farm business
Partial Budget
Name 3 of the 5 potential sources of cash (the categories not just corn revenue and bean revenue)
1) cash on hand at beginning of the period
2) farm product sales or cash revenue from operating
3) capital sales = cash received from sale of capital assets
–like land, machinery, breeding livestock, dairy cattle, etc.
4) nonbusiness cash receipts
–Like nonfarm income, cash gifts, and any other sources of cash
5) newly borrowed capital or loans received
What is the purpose of the balance sheet?
Measure Net Worth
Total Revenue - Total Expenses
= Net Farm Income From Operations