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Finances

Differences in Working Capital among Farms

This article examines differences in the characteristics for farms with a current ratio above and below 2.0.  In addition, we examine the correlation between the current ratio and farm characteristics.

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Measuring & Analyzing Farm Financial Performance

Compute accrual net farm income, and key financial ratios and repayment capacity measures from Schedule F information and beginning and ending balance sheets.

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Financial Management – Statements & Analysis

A series of financial management articles that examine financial statements and financial analysis. Financial management involves the evaluation of liquidity and solvency, financial planning, acquisition and use of financial resources, asset purchases and farm growth, and relationships with agricultural lenders.

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Examining Trends in Liquidity for a Sample of Kansas Farms

This article examined trends in liquidity for a sample of KFMA farms.  Liquidity, measured using the current ratio, has declined substantially since its peak in 2013.

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Cattle Finishing Net Returns in 2020

This article discussed recent trends in feeding cost of gain, the feeder to fed price ratio, breakeven prices, and cattle finishing net returns. Average cattle finishing losses in 2019 were estimated to be approximately $80 per head. Average losses for 2020 are projected to be approximately $85 per head.

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Operating Profit Margin Benchmarks

This article examines trends in the operating profit margin for a sample of farms over a ten-year period and develops financial performance benchmarks. Specifically, using KFMA whole-farm data for farms with continuous data from 2010 to 2019, the operating profit margin ratio is computed for each farm and year. Also, the operating profit margin ratio and corresponding farm characteristics are compared across financial performance quartiles.

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Understanding USDA Farm Income Forecasts

USDA forecasts farm income in February and then releases four additional updates throughout the year as more data becomes available. In this episode of the Purdue Commercial AgCast, Purdue agricultural economists Todd Kuethe and Brady Brewer discuss the USDA Farm Income Forecast, which was updated on September 2, and the accuracy and bias of these forecasts along with how to interpret the adjustments.

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Conventional and Organic Enterprise Net Returns

This article uses FINBIN data from 2015 to 2019, to compare crop yields, gross revenue, total expense, and net returns for conventional and organic alfalfa, corn, oats, soybeans, and winter wheat.

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Using Vendor and Trade Credit for Farm Purchases

Purdue University agricultural economist Brady Brewer is joined by Purdue Agricultural Economics graduate student Chad Fiechter and Kansas State agricultural economist Jennifer Ifft to discuss issues surrounding vendor and trade credit in the agricultural finance sector. There has been a lot of growth in farmer use of vendor and trade credit as terms and conditions…

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Is it Feasible for my Farm to Add an Operator or Hired Employee?

As a farm expands, it is important to evaluate the feasibility of adding an operator and/or hired employees as well as the feasibility of purchasing or renting additional land, and machinery and equipment.  The feasibility of augmenting labor on a farm depends on two critical factors: gross revenue and profitability.

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