finances in the animal science industry. what kinds of records should businesses keep? assets...

Finances in the Animal Finances in the Animal Science IndustryScience Industry

What kinds of records should businesses keep?

• Assets

• Liabilities

• Net worth

• Profit and loss statement

• Cash receipts

• Non-cash receipts

• Invoice

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

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

Assets

Non-current Assets

• Items that have a useful life or more than one year– land– machinery– breeding livestock

Liabilities

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

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

Net Worth

• Total assets minus total liabilities.

• Current Assets + Non-Current Assets=Total Assets

• Current Liabilities + Non-Current Liabilities=Total Liabilities

Inventory

• An itemized list of things owned by a business with the beginning value and depreciated value

• Two types of inventory– Non-depreciable– Depreciable

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• Depreciable-items that have a useful life of more than one year and lose value because of age, wear or becoming out-of date because of technology advancements.

Inventory

• Land is NOT depreciable property

• Depreciable property examples:– tractor– computer– chainsaw

Profit and Loss Statement

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

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

Invoice

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

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 = Total Liability

Net Worth

Pop Quiz

1. 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?

Pop Quiz

2. 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 farmer’s net worth.