Finances in the Animal Science Industry

What kinds of records should businesses keep? Assets Liabilities Net worth Profit and loss statement Cash receipts Non-cash receipts Invoice

Assets Things that one owns and completely pays for Tangible in value –Example: A car after all payments have been made. Two types of assets –Current and non-current

Assets Current Assets Items quickly converted to cash or that will be sold within 12 months –cash –checking –savings –stocks or bonds –non-depreciable inventory of crops and livestock

Assets Non-current Assets Items that have a useful life or more than one year –land –machinery –breeding livestock

Liabilities Things that you owe money to other people for or debts –Example: credit cards

Liabilities Current-debts that are due to be paid this year –fertilizer and feed bills –tractor and building payments –part of the mortgage due this year Non-Current-debts not due this year –mortgages not due this year

Net Worth Total assets minus total liabilities. Current Assets + Non-Current Assets=Total Assets Current Liabilities + Non-Current Liabilities=Total Liabilities

Inventory An itemized list of things owned by a business with the beginning value and depreciated value Two types of inventory –Non-depreciable –Depreciable

Inventory Non-depreciable-items that will be used or sold within a year –feed –supplies Depreciable-items that have a useful life of more than one year and lose value because of age, wear or becoming out-of date because of technology advancements.

Inventory Land is NOT depreciable property Depreciable property examples: –tractor –computer –chainsaw

Profit and Loss Statement A financial statement of a business that reports the profit made by the business or the losses incurred.

Receipts Cash Receipts –Cash that is paid for services or merchandise. Non-Cash Receipts –Payment for services in other ways than cash. Food Services Gifts

Invoice Shows items and prices for things that have been bought from a certain business.

Debt-to-Equity Ratio Used by banks and lending institutions to decide whether or not to lend money to specific people or businesses Debt-to-Equity Ratio = Total Liability Net Worth

Pop Quiz 1.If a beef farmer has 200 head of cow valued at $400 each, 20 tons of feed worth $200 per ton, 2 tractors worth $50,000 each, a manure spreader worth $4,000, and 10 acres of land worth $5,000 per acre, what amount should be entered on the total value of non-depreciable items line of the inventory page?

Pop Quiz 2.A swine farmer has current assets listed at $30,000 and non-current assets listed at $150,000, he also has current liabilities listed at $10,000 and non-current liabilities listed at $50,000. Calculated the farmer’s net worth.