Financial analysis of the future without a plan
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Financial analysis of the future without a plan

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  • 1. Ties to the Land Succession Planning for Livestock (and other Ag.) Producers Bart Eleveld, OSU Extension Economist Private Lands Committee USDA—Risk Management Agency
  • 2. Outline for the day
    • 9:30 Registration/Check-In
    • 10 am Case Example Ranch and Financial Analysis
      • Bart Eleveld, Oregon State University
    • 10:30 Succession Planning Process, Fair vs. Equal, Conflict Resolution
      • Steve Hopkins and Doug Sippel, Titan Financial Associates
    • 11:15 Appraisal, Valuation Discount Issues
      • Randy Guyer, CPA
    • 12 noon Lunch
    • 12:30 Land Trusts
      • Frank O’Leary, Oregon Rangeland Trust
    • 1 pm Legal Issues—LLC, FLP, Buy-Sell Agreements
      • George Guyer, Attorney
    • 1:30 Charitable Remainder Trusts
      • Harold Weight, Multiplan Financial Services
    • 2:15 Panel Discussion, Q&A
    • 3:00 Closing and Evaluations
  • 3. Succession planning ≠, > Estate Planning
    • Need to think about what happens if you live as well as what happens if you die
    • How to transfer control, decision making and operation of the business if that is an objective
    • If the business is not to continue, who gets what, and when?
  • 4. Inventory of the Legacy: Case Study and Financial Analysis Of Future Alternatives Dr. Bart Eleveld Extension Economist, Farm & Ranch Management Agricultural & Resource Economics Department
  • 5. Ray and Reba Rancher
    • Ray and Reba are mid 60’s, still active on ranch but moving towards retirement.
    • Reba had full-time job with no retirement benefits, Max had part-time job in winter.
    • 3 children, aged 36 – 41.
    • 800 Cow-calf pairs
    • 400 ac. Irrigated alfalfa
    • 100 ac. Winter wheat rotation crop
    • 300 ac. Native grass hay (baled)
    • 100 ac. Irrigated pasture
    • 3500 ac. Deeded rangeland
    • 4650 AUM Public rangeland pasture
  • 6. Family Dynamics
    • Ray and Reba want to ease into retirement but stay on ranch.
      • Have started drawing SS
      • Fairly good health for now.
    • Oldest son, Ray Jr. (41), joined ranch management after college graduation.
      • Divorced from Rosie (39) and has 3 kids, aged 10 – 14. Oldest already works on ranch and wants in someday.
    • Second son, Roy (37), has professional career in NYC, is estranged from family.
    • Daughter Rita Wrangler (36), married to Rudy who has professional, 6 figure income.
      • Has daughter (12) who is interested in ranching.
      • Lives in town, but wants to have a house on the ranch.
  • 7. Current Financial Status
    • Balance Sheet is pretty healthy but cash flow and income is tenuous.
    • Current ratio = 1.88
    • Farm debt to asset ratio = 37% (33% total)
    • Farm equity to asset ratio = 63%
    • Rate of return on farm assets = 1.7%
    • Term debt coverage ratio = 103%
  • 8. Balance Sheet (Details in hand-out)
  • 9.  
  • 10. Income and Cash Flow (Details in Handout) YMMV !!!
  • 11. Resources for Balance Sheet Income Statement & Cash Flow
    • FINPACK financial analysis software
      • Center for Farm Financial Management @ U. of MN.
      • Does balance sheet plus feasibility and cash-flow budgeting for whole farm/ranch management plans
      • Free trial download available:
        • http://www.cffm.umn.edu/
      • Can “rent” an annual license for ~ $100/yr.
    • 2 spreadsheet formats
      • Montana State University’s
      • OSU/WSU Integrated Financial Statements
      • Both on Succession Workshop website:
        • http:// arec.oregonstate.edu/succession.html
  • 12. Prineville Keywords
    • Mellow
    • O on h (brand?)
    • Blank—11several pasture
    • Alder
    • Blue & red
    • Key
    • Family
    • Lock & key
    • Saving the ranch
    • MAC
    • Angus1
    • Midori
    • JCN
    • Ford250
    • Sukey
  • 13. Baker City Keywords
    • Blank—(211wheat)
    • Blackbulls
    • Sam
    • Blank—(221 Potatoes/cattle)
    • Forty seven
    • Z
    • Blitz
    • Bing01 ??
    • Kathryn
    • Sutton
    • 10dalton
    • Badger
    • Busy
    • Gus
    • )(
    • HD
    • host (or Lost)
    • Red Rock
    • Dogger
    • Cooper
    • 50
  • 14. Burns/Hines Keywords
    • Covert
    • Steers
    • Rodeo1
    • Plan
    • Family
    • Ruby
    • Lyle ???
    • Rex
    • Cottonwood
    • Hank
    • CAB
    • Iris
    • Lester
    • Blank—420 cattle
    • Blank—420 beef
    • Meat hook
    • cattle
  • 15. Klamath Falls Keywords
    • Blank—110 hay grain
    • Rabbit
    • BVR
    • Maxcat
    • “ ?”
    • FPI
    • Blank—220 cattle
    • Tyler
    • Marie
    • Wheatgrass
    • Angus
    • Roseblossem
    • 21
    • Molly
    • Gramma
    • Hereford
  • 16. Eugene Keywords
    • SLF
    • Symphony
    • Extension
    • Diamond2
    • Beef
    • G&C Farms
    • 2 Horse
    • Blank—(411Beef/Timber)
    • Diamond
    • Heritage
    • Jake
    • Bellatrace
    • Hermitage
    • Douglas Fir
    • Ponderosa Pine
    • Oscar dog
    • Calpooia
    • Checkers
    • Kieth
    • Red1