Money Grows on Trees, Right

1
Money Grows on Trees, Right?

• Cash Flow Statement

2
True or False?

• Cash income and expenses tell the entire story of
  the business.
• Profits and cash generated are essentially the
  same thing.

3
Cash Flow Statement

• Cash Inflows
• Operating receipts
• Crop and livestock sales, government payments,
  other farm income
• Capital sales
• Contributed capital

4
Cash Flow Statement

• Cash Outflows
• Operating expenses (feed, fertilizer, etc.)
• Capital purchases
• Family living and other withdrawals

5
True or False?

• A cash flow statement contains the same
  information as an income statement, except the
  information is broken down into the actual months
  transactions occurred.
• Capital purchases are for items that have a
  useful life of more than one year.

6
Developing a Cash Flow Plan

• Establishes target levels for income and expenses
  which can be used in monitoring progress towards
  goals
• Points out potential problems in meeting
  financial obligations
• Indicates when cash is available for new
  investments

7
Developing a Cash Flow Plan

• Sources of information
• Records
• Debt schedule
• Plans for purchases, sales

8
Cash Flow Plan

• Beginning cash balance
• Inflows - outflows
• Cash position
• New borrowing
• Cash paid for interest on operating loan
• Principal payments on operating loans
• Ending cash balance

9
Accrued Interest

• Use cash flow plan line of credit balance to
  demonstrate calculation of accrued interest.