Farm Financial Statements
Knowing the financial position of the farm is very important to the future success of the business. Identifying that position and overall performance of a farm business is summarized through several important financial statements. These statements illustrate various aspects of the business including net worth, profitability, and cash flow.
Information from these statements can be very useful, including:
- Making important financing, operating, and investment decisions
- Provide needed information for credit applications
- Analyze the performance of the farm business
- Create budgets for use in planning
The balance sheet provides a snapshot of a business’ assets, liabilities, and its net worth (also known as owner equity). The balance sheet should be produced at least once a year at the end of the fiscal year.
- Balance Sheet (USDA Farm Service Agency, Form FSA-2037)
- Balance Sheet: A Financial Management Tool (Kansas State University) – PDF or Excel Spreadsheet available
The income statement provides a measure of the profitability of a farm or business over a specific period of time (often a calendar year). It shows all of the income and expenses from inventories and cash transactions for the farm.
- What is an Income Statement? (University of Minnesota)
- Your Farm Income Statement (Iowa State University)
- Projected Income & Expense (USDA Farm Service Agency, Form FSA-2038)
- Income Statement: A Financial Management Tool (Kansas State University) – PDF or Excel Spreadsheet available
Cash Flow Statement
The cash flow statement provides information on how changes from the balance sheet and cash transactions (income) affect the farm business’ overall cash position. It analyzes how cash was used to meet financing, investing, and operating activities during a specific period.
- What is a statement of cash flows? (University of Minnesota)
- Understanding Cash Flow Analysis (Iowa State University)
- Preparing a Projected Cash Flow Statement (Purdue Extension)
- Cash Flow Projection for Operating Loan Determination (Kansas State University) – PDF or Excel Spreadsheet available
- Comprehensive Financial Statements (Iowa State University) a tool that includes fillable balance sheets as well as income and cash flow statements.
- Business Analysis Handbooks (Michigan State University) provide all three financial statements and a guide on how to analyze the farm’s financial position and performance.