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Management Information Systems Terry DeGroff Burwell, Nebraska Books, Records & Controls.

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Presentation on theme: "Management Information Systems Terry DeGroff Burwell, Nebraska Books, Records & Controls."— Presentation transcript:

1 Management Information Systems Terry DeGroff Burwell, Nebraska Books, Records & Controls

2 Management is… Planning, organizing, directing, and controlling a business. The most important and challenging is control… the process of analyzing, evaluating and interpreting the production and financial performance of a business.

3 Information… Can and does come from many sources. Some of the best and most needed information can come from each business’ own financial and production records.

4 Systems… Need to be implemented that allow for only necessary record keeping and effective use of records. Summary information from these records should be invaluable in day to day business decisions.

5 Management Planning Organizing Directing Controlling

6 Management Control The Best Decisions Require the Best Information

7 Uses and Purposes of Financial Records Management Decision Making Credit Acquisition Income Tax Reporting

8 Keys to Successful Record Keeping

9 Simple yet Useful

10 Keys to Successful Record Keeping Excessive detail often ends in Confusion, Frustration, and Failure

11 Keys to Successful Record Keeping Meet your Needs, Abilities, & Limitations

12 Keys to Successful Record Keeping Know your Purpose for Keeping Records Income Taxes Management Banking

13 Accounting Rules Standards of Communication

14 Accounting Rules Generally Accepted Accounting Principles – (GAAP)

15 Keys to Successful Record Keeping Accurately Match Expenses with Income

16 Cash and Accrual Accounting  Refers to the timing of entries into the accounting system

17 Cash Based Records  Transactions are recorded when cash is received or paid out

18 Accrual Based Records  Transactions are recorded when they take place  Regardless of whether cash is involved

19 Accrual Adjusted Statements  Cash based records are kept throughout the year  Non-Cash adjustments are made to the cash based income statement at the end of the year

20 Accrual Adjusted Income Statement  Cash incomes and expenses must be adjusted by: Changes in non-cash assets Inventories Pre paid expenses Receivables Changes in non-cash liabilities Payables Accrued interest

21 Financial Analysis Basic Set of Financial Statements Requires

22 Basic Financial Statements Balance Sheet Income Statement Statement of Owner Equity Statement of Cash Flows

23 Assets = Liabilities + Equity Equity = Assets - Liabilities

24 AssetsLiabilities Equity AssetsLiabilities Equity +/- Net Income +/- Valuation Changes - Capital withdrawals + Capital contributions Beginning Balance SheetEnding Balance Sheet

25 Financial Analysis Basic Set of Financial Statements Understanding of how to Analyze and Interpret the Financial Statements Requires

26 Ratio Analysis Liquidity Solvency Profitability Financial Efficiency Repayment Capacity

27 Financial Analysis Objectives –Measure Financial Condition

28 Financial Analysis Objectives –Measure Financial Condition –Measure Financial Performance

29 Financial Analysis  All business owners should have a basic set of financial statements at their disposal and they should know how to analyze and interpret them.

30 Profitable Management of the “Extensive” Enterprise Forage-based cow/calf production has long represented a management paradox. Very high investment requirements per dollar of output provides a strong incentive to increase output per head (thereby reducing investment per dollar of output). Unfortunately, this ever-so-tempting objective has been regularly frustrated by the low economic responsiveness to performance enhancing technology. In short, it simple has not paid to manage beef cows or perennial grass with the same “intensity” as we do with more intensive enterprises like dairy cows, hogs, and row crops.

31 Profitable Management of the “Extensive” Enterprise In extensive enterprises (such as the commercial cow/calf business), we seldom find it profitable to maximize yield per acre or performance per animal. Rather than “pouring on the technology”, we must recognize the nature of the brute, live harmoniously with nature, and make a very discriminating use of yield or performance- enhancing technology. In brief---we generally have to finesse a profit.

32 Profitable Management of the “Extensive” Enterprise Output maximization may approximate optimal management for intensive enterprises. However, optimal management of the extensive enterprise comes closer to input minimization. V.E. Jacobs, 1984

33 A Paradox Farmers believe they benefit from agricultural technology…but they don’t Consumers don’t believe they benefit…but they do

34 Technology is…. Productivity enhancing Management intensive Capital intensive Not scale neutral

35 The End


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