University of Maryland Extension

Economic assessment and risk management

Additional resources and literature cited

Urban Ag home | Table of contents Agricultural business planning The Organic Farmer’s Business Handbook : A Complete Guide to Managing Finances, Crops, and Staff—and Making a Profit. By Richard Wiswall. Published in 2013 by Chelsea Green Publishing. Business Planning section of UMD Extension’s...

Summary

Urban Ag home | Table of contents Understand profit and cash flow is paramount to the success of the business. Profitability measures the amount of farm income generated from sales of goods and services over and above the expenses required to generate that income. An income statement is used to...

What accounting period should be used?

Urban Ag home | Table of contents An accounting period summarizes revenue and expenses for a given period of time. It can be a calendar year or a fiscal year. A calendar year starts on January 1 and ends on December 31. The year can be further broken into quarterly or monthly periods. The fiscal...

Which computer accounting program should I use?

Urban Ag home | Table of contents Some farmers record incomes and expenses in a ledger book. However, many farmers now have computers that simplify the bookkeeping. Even inexpensive computer tablets have the capacity to do record keeping. Computer accounting programs range from inexpensive to...

Recording financial transactions

Urban Ag home | Table of contents All income & expenses and inflows & outflows need to be recorded in a bookkeeping system. Farmers should set aside time each week and sometimes daily to do this. Each transaction should be recorded including the date, the amount, and the type of transaction...

Recordkeeping

Urban Ag home | Table of contents A manager of a farm needs a good record keeping system to analyze profit and cash flow. Many businesses will contract out their accounting to an accounting firm. These firms typically use generally accepted accounting principles and produce standardized financial...

Solving cash flow problems

Urban Ag home | Table of contents Most farms at one time or another experience cash flow problems. The cash flow budget is one of the best ways to pinpoint these problems, but it will not solve cash flow problems, rather it reveals symptoms of problems. Measures can then be taken to deal with the...

Usefulness of cash flow

Urban Ag home | Table of contents The cash flow is one of the most useful tools a farm manager has for managing the business. The reason that a cash flow budget is useful is because it forces you to think through all production and marketing aspects of your business. As mentioned before, many...

Example farm cash flow

Urban Ag home | Table of contents Figure 4 illustrates the cash flow for the farm in the previous example. The income statement is also included to contrast the similarities and the differences in these two financial statements. Compare these financial statements with the formulas in figure 3 . The...

Income & expenses versus inflow & outflows

Urban Ag home | Table of contents Figure 3: The calculations to determine profit and cash are similar, but include different kinds of income and expenses. The text of this section explains these differences, marked by numbers in the figure and the text to help you refer back and forth. A cash flow...

Pages

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