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    efterstræbte efterstræbte Presentation Transcript

    • Financial Planning with FAST Tools By Paul N. Ellinger Gary Schnitkey Travis Farley
    • FAST Tools
      • farmdoc companion project initiated in 1999
      • Development of 42 spreadsheet-based tools to aid decisions for producers, lenders, consultants and investors
      • Facilitate use, access, distribution of tools and resources through CD and internet distribution
        • Quarterly subscription
        • farmdoc download
        • via workshops
      • Approximately, 30,000 CDs produced and another 35,000 downloads
      • Increased demand for education and training
    • Current Resources and Activities
      • 45 laptop computer lab
      • FAST educator / coordinator
      • CD duplication
        • internal and cooperate w/other extension programs
      • 50+ annual meetings in Illinois / integrated FAST
        • 80% were supported w/RMA
      • Teaching modules for each program
        • Case studies and examples
      Theme & Focus Teach Decision Making Integrate and utilize FAST Not just computer training
    • Educational Efforts 3 Dimensions Content/ Meeting Type Intended Audience Host(s)
    • Content: Modules
      • Financial planning
      • Crop insurance
      • Grain inventory pricing and management
      • Machinery management
      • Land investment and lease analysis
      • Enterprise analysis
    • Audiences Targeted and General
      • Farmers
        • General and women via Annie’s project
      • Lenders
      • FSA
      • Farm bureau managers
      • College and High School Students
      • Educators (train the trainer programs)
        • College and Jr College instructors
        • Vo-Ag Teachers
        • Extension Educators
        • State record fieldstaff (Iowa, KY, Illinois and Alabama)
    • Hosts “Getting the right people at the table”
      • Typical Extension Channels
      • Farm Bureau
      • Farm Credit System
      • Commercial Banks
      • Growmark
      • State Record Keeping Associations
    • FAST Tools - Overview farmdoc materials Computerized Decision Aids Financial Analysis Investment Analysis Loan Analysis Farm Management Grain Marketing & Management Risk Management Yield and Land Database Utilities AgMas Crop Insurance Proceedings: Farm Management Financial Management Policy Law and Taxation Grain Marketing
    • Financial Analysis
      • Appraisal of current financial position
      • Balance sheet
      • Ratio calculator
      • Cash flow planning
      • Cash to accrual income approximation
      • Estimates of deferred taxes
      • Repayment capacity analysis
      • Personal financial planning
      • Longer-term planning – in development
      • Net worth allocation
      Assist in preparing and interpreting financial information and measuring financial health
    • Investment Analysis Assist in measuring the economic returns and performance of alternative types of investments.
      • Capital budgeting
      • Grain bin analysis
      • Land purchase analysis
      • Lease versus purchase
      • Machinery financing
      • MACRS calculator
      • Savings calculator
      • Time value of money calculator
    • Loan Analysis
      • Loan amortization
      • Loan comparison
      • Revolving loan calculator
      Assist in calculating loan payments and schedules; comparing alternative loans; and measuring the sensitivity of payments to changes in loan parameters
    • Farm Management Assist in developing enterprise budgets and breakeven levels; estimating costs of machinery operations; and comparing crop insurance and farmland leasing alternatives
      • Break even analysis
      • Crop budgeting tool
      • Crop insurance calculator
      • Enterprise allocation and analysis
      • Farmland lease analysis
      • Machinery lease analysis
    • Grain Marketing and Management Assist in tracking grain inventory and estimating the costs and returns of grain storage and delivery
      • Crop storage analysis
      • Grain delivery model
      • Grain pricing model
      • Grain inventory management
    • Risk Management Assist in evaluating the impact of farmland lease types as well as marketing and crop insurance strategies on revenue and income distributions.
      • Crop insurance historical evaluator
      • Farm rent evaluator
      • Marketing and crop insurance risk model
    • Yield and Land Database Utilities Assist in analyzing county-level historical crop yields and land prices and assist with common computations related to soil productivity measures and yield predictions
      • Illinois, Indiana, Iowa crop yield database
      • Illinois farmland sales database
      • Illinois soil productivity index utilities
    • Financial Planning Modules
    • Day Program
      • Repayment analysis
      • Ratio analysis
      • Financial Planning
        • Annual and multi-year
    • Repayment Capacity
      • Critical for determining and understanding the income needs from the farming operation
      • Good discussions regarding family living budgets
        • Resources:
          • Illinois record keeping data
          • Consumer expenditure studies
          • www.bls.gov/cex/
    • Repayment Capacity, cont.
    • Stage 1: Repayment Analysis
    • Stage 2: Repayment Analysis
    • For Illinois: Risk Analysis
      • Enter Budget and Crop Insurance Data
      • Based on 31 years of county level production and price data
      • Assess the likelihood of achieving income levels needed
    • Ratio Calculator
      • Designed to assess financial health through ratio and trend analysis
      • Minimum set of data needed to complete the “sweet 16” ratios
      • Calculate “scaled” health and trend index for each ratio.
      • Store multiple years
      • Professional version for multiple customers
    • Educational Programs
      • Case study
      • Drawbacks and cautions of financial ratios
      • Evaluate the strong and weak areas (liquidity, profitability, leverage, repayment capacity)
      • Assess strategies to improve the various areas
    • Why Budget?
      • Decision analysis benchmarks
        • Cost control
        • Marketing
        • Identify opportunities
        • Contingency planning
        • Meet financial goals – discipline
        • Managing cash surplus/deficits profitably
      • Organization
      • Communication
      • Monitor performance
      • And … my lender wanted one
    • Desired Components of a Financial Plan
      • Focus on projected profitability of a plan – not just cash flow
        • What do we need to break even?
        • What cushion do we have to meet debt payments?
      • Sensitivity analysis (stress testing)
        • Prices
        • Production
        • Costs
        • Interest rates
      • Basis of comparison and validation
        • Benchmarks
        • Previous year comparison
        • Comparison to actual
    • Getting Organized
      • Synchronize cash, loan, and inventory balances
      • Total cash expenses for 2005
      • Current inventories
        • Units and price
      • Status of government payments
        • Due from 2005 crop
      • Balance and payment schedules for loans
        • Interest owed at end of year
        • Scheduled payments
      • Items prepaid for 2006 crop and payable for 2005 crop at the end of the year
    • Getting Organized, continued
      • Enterprise cropping plan
        • acres
        • share of acres
        • lease type and share
        • expected production
        • government payments
        • costs per acre
      • Crop insurance protection
        • Level of yield or revenue protection
      • Livestock plan
        • Expected production
        • Expected sales and purchase price
        • Feed costs
        • Other livestock expenses
    • Getting Organized, continued
      • Planned capital purchases
        • Expected level and cost of financing
      • Nonfarm sources and uses of cash
        • Wages
        • Business income/expenses
        • Family withdrawals
      • Before visiting lender
        • Check if lender is using suggested commodity prices
        • View Consumer Credit Report: See handout
    • Financial Analysis
      • Case Study
      • Enter complete set of cash flow information
      • Customize budget entries per site location
    • Financial Planning Attributes
      • Built-in risk parameters
      • Quarterly projections
        • Cash flow
        • Income statements
        • Commodity sensitivity and break even
        • Previous year comparison
        • Scenario analysis
    • Financial Planning Demos
    • Comments and Questions
      • Complimentary CDs
      • Looking for reviewers, partners and ideas
      • Cooperate in CD production
      • Facilitate your programs