Missouri Dairy Business Update
Farm Finance Basics:
Complete a Balance Sheet - January 1
Tracking your farm financial progress starts with completing a Balance Sheet as of January 1st every year. The balance sheet lists everything you own and everything you owe.
The difference needed to "balance" what you owe and what you own is your equity or net worth at the point in time you do the balance sheet.
Completing a balance sheet every year as of January 1, gives you the ability to:
- Track and demonstrate growth in wealth to lenders or stakeholders
- Combine income and expenses from calendar year tax records with changes in your balance sheet, allowing one to see the true "accrual" profit or losses
- Examine trends in working capital (current assets - current liabilities)
- Serve as a quick template to update any time of year you may need a balance sheet for a lender when getting a loan
If you don't have a standard blank balance sheet from your lender, here is a balance sheet form and a completed dairy balance sheet to use as an example. Additional farm balance sheet templates are available online simply by doing an internet search for "Farm Balance Sheet."
To learn more about using farm financial statements and measure, check out the Center for Farm Financial Management's web site at: http://ifsam.cffm.umn.edu/