Trends in Working Capital and Financial Solvency

TLDR: In this paper, the authors present a complete and accurate set of financial documents that include an accrual income statement and a balance sheet, which can be used to make decisions.

Abstract: Many of you are in the midst of preparing financial statements for 2016. It is important to take the time to prepare a complete and accurate set of financial documents that include an accrual income statement and a balance sheet. Those two documents...or better yet, a series of those two documents from several years provide valuable financial facts about your farm business. The accrual income statement measures the net revenue income that results from the fruits of your management skills and the local/global economic environment in which your farm operates. Your balance sheet (at fair market value or FMV) is a ‘stock’ measure at a point in time (usually 31Dec20xx) of the assets in your farm business and the claims of ownership (via debt or equity) on those assets. There is no substitute for a good set of financial records that can be used to make decisions.