Finances in the Animal Science Industry

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Finances in the Animal Science Industry
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What kinds of records should businesses keep?

• Assets
• Liabilities
• Net worth
• Profit and loss statement
• Cash receipts
• Non-cash receipts
• Invoice

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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

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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

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Assets

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

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Liabilities

• Things that you owe money to other people for or
  debts
• Example credit cards

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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

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Net Worth

• Total assets minus total liabilities.
• Current Assets Non-Current AssetsTotal Assets
• Current Liabilities Non-Current
  LiabilitiesTotal Liabilities

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Inventory

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

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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  or becoming out-of date because of technology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.

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Inventory

• Land is NOT depreciable property
• Depreciable property examples
• tractor
• computer
• chainsaw

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Profit and Loss Statement

• A financial statement of a business that reports
  the profit made by the business or the losses
  incurred.

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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

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Invoice

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

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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
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Pop Quiz

• 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?

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Pop Quiz

• 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 farmers net worth.