TITLE : FARM INVESTMENT AND FINANCIAL ANALYSIS.*

HOW TO USE TH IS BOOK xi
 
PART I FINANCIAL STATEMENT ANALYSIS	1
 
CHAPTER 1 THE BALANCE SHEET		3
What is a Balance Sheet? 4
How Should Assets be Valued? 6
Structure of the Balance Sheet 9
Statement of Change in Owner Equity	19
Analysis of Balance Sheets 21
Comparative Analysis 26
Pro Forma Analysis 27
Summary 28
 
CHAPTER 2 THE INCOME STATEMENT	29
Organization of the Income Statement	31
Depreciation 38
Investment Tax Credit 45
Analysis of the Income Statement 46
Projecting Future Income Statements 51
Summary	 2
 
CHAPTER 3 THE CASH FLOW STATEMENT		55
What is a Cash Flow Statement? 56
Organization of the Cash Flow Statement 57
Preparing a Projected Cash Flow Statement 62
Uses and Advantages of the Cash Flow Statement 64
Pro Forma Analysis 67
Summary 70
 
 
PART II FARM INVESTMENTANALYSIS	73
 
CHAPTER 4 INFORMATION NEEDED IN INVESTMENT ANALYSIS		75
Potential Net Cash Revenue Flows 77
Expected Net Cash Flow and Risk 83
Discounting Expected Net Cash Flows 87
Other Information Needed 96
Summary 98
 
CHAPTER 5 CAN YOU REDUCE YOUR EXPOSURE TO RISK?	101
Product Diversification	102
Sequential Marketing 103
Formal Insurance 105
Futures Market Contracts 106
Production Contracts 111
Participation in Federal Farm Programs 112
Outside Equity Capital 114
Implications for the Availability of Loan Funds	114
Summary 115
 
CHAPTER 6 INVESTMENTSTHAT DO NOTALTER ENTERPRISE MIX	117
Bid Price for Farmland 119
Expanding Existing Inventory of Depreciable Assets 125
Joint Investment in Land and Depreciable Assets 130
Summary	136
 
CHAPTER 7 INVESTMENTS THAT ALTER ENTERPRISE MIX	139
Need to Consider Your Entire Portfolio	141
Steps to Follow 141
Evaluating Acceptability: An Example 147
Summary 155
Chapter 7 Appendix: Selected Worksheets 157
 
CHAPTER 8 REPLACING EXISTING ASSETS	163
Replacing Machinery and Equipment 164
Replacing Beef Cows 173
Replacing Other Livestock 179
Summary 182
 
CHAPTER 9 WHICH INVESTMENTS SHOULD YOU MAKE?	185
Points to Reconsider Before Ranking Investments	186
Ranking Current Investment Opportunities 189
Differences in Economic Lives 191
Summary 194
 
 
PART III FINANCING NEW INVESTMENTS	197
 
CHAPTER 10 WHERE TO OBTAIN FARM LOANS?	199
Farm Lenders and Their Market Shares 201
Farm Credit System 203
Commercial Banks 206
Government Lending Agencies 210
Life Insurance Companies 214
Individuals 215
Merchant Dealer Credit 21F5
Summary 217
 
CHAPTER 11 BORROWING TO FINANCE FARM INVESTMENTS	219
Cost of Borrowed Funds 220
Cost of Using Your Own Funds 227
Optimal Mix of Borrowed Funds and Own Funds	228
Loan Repayment Options 230
Summary 233
Chapter 11 Appendix: Computing the APR 235
 
CHAPTER 12 IS LEASE FINANCING IN YOUR FUTURE?	239
What is a Financial Lease? 241
Lease Financing Versus Debt Financing	241
How to Decide Which Method to Use	242
IRS Requirements for a Lease 248
Summary 248
 
 
APPENDIX A	PRESENT VALUE OF $1 AT COMPOUND INTEREST	251
APPENDIX B	PRESENT VALUE OF $1 AT COMPOUND INTEREST FOR AN EQUAL
            SERIES OF PAYMENTS 255
APPENDIX C	TABLES 259
 
GLOSSARY DEFINITIONS OF TERMS USED FREQUENTLY THROUGHOUT THIS BOOK 289
 
INDEX	297