Fundamentals Of Financial Management

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Fundamentals Of Financial Management
Original Power Point Created by Steve Richards
for CCE Wyoming Erie Counties Modified by
Georgia Agriculture Education Curriculum
Office June, 2002
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What Is Farm Management?

• The ability to use resources in an efficient
  manner so as to maximize returns to
• Business goals
• Personal goals

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Personal Vs. Business Goals

• Personal goals and business goals require the
  same things
• Money
• Moderate to strong financial performance
• Growing equity in the business every year

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Achieving Your Goals

• REQUIRES
• FINANCIAL MANAGEMENT!!

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What Is Financial Management?

• The ability to allocate financial resources in
  the areas which generate the greatest returns.

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Financial Management Decisions

• Pricing your product
• Making changes in your business
• Making business decisions
• Investment decisions

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Pricing Your Product

• One of the most critical components of marketing.
  A common concern!
• Critical in achieving sales and profitability
• Need to know your costs of production

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Making Business Changes

• Input substitution
• Capital for labor buying a transplanter
• Buying vs. Raising plugs
• Enterprise changes
• Whether or not to raise a particular product
• Adding another operation to your business

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Making Business Decisions

• Are your sales covering your costs
• Which products generate the most income
• Should you produce or shut down
• Optimum mix of products
• Contributions to fixed costs
• Goal setting and increased efficiency

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Making Investment Decisions

• Capital purchases
• Should I expand my greenhouse?
• Should I buy a new watering system?
• Which is best investment for my money?
• How can I maintain strong financial performance?

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How To Make Sound Financial Decisions?

• Good record-keeping
• Construct financial statements
• Perform financial analysis
• Participate in benchmarking

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Good Record Keeping

• Keep records for more than just taxes!
• Use a computer!
• Financial information should be at your
  fingertips at all times

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Constructing Financial Statements

• Income statement, balance sheet, cash flow
  statement
• Banks require these statements
• Can often be tedious to complete

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Perform Financial Analysis

• Cost analysis
• Ratio analysis
• Enterprise analysis

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Participate in Benchmarking

• How do you compare to other firms in the
  industry?
• Set performance goals
• Track your performance over time (trend analysis)

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How Can I Do All This?

• GREENHOUSE BUSINESS SUMMARY

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Why Participate?

• Prepares Financial Statements
• Performs Financial Analysis
• Compiles a Financial Benchmark Database
• Its FREE!!

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Objectives of GHBS

• Improve financial management skills
• Help producers set future goals
• Make progress towards goals

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What Do I Need?

• Record of all cash receipts
• expenses
• Asset Inventory
• General Business Info.

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How Do I Start?

• Wen-fei Uva 607-255-3688 wl32_at_cornell.edu
• Steve Richards 716-786-2251 str4_at_cornell.edu
• SIGN UP TODAY! SEE BACK PAGE!