AgEcon Final Review

AgEcon Final Review - AgEcon Final Review Wednesday May 10,...

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AgEcon Final Review Wednesday May 10, 10:15-12:15 Chapter 9 The first step in putting together a comprehensive, complete cash flow budget is to assemble all of the components. The next step is to adjust cash outflows to match inflows or to find ways to finance the operation. Short-term debt usually is available in one of three ways: revolving line of credit; a non-revolving line of credit; or a short-term note. Lines of credit are instruments that allow the borrower to draw funds up to a negotiated limit, as those funds are needed. A positive funds available balance will be used in this order: -Maintain the desired minimum ending cash balance -Pay interest on short-term borrowed funds -Repay short-term borrowed principal -Transfer remaining excess to savings account There is really only one way to repay short-term debt: pay interest first and repay principal second from excess operating funds. Interest must be paid first and repaying funds early under a non-revolving line of credit should be approached cautiously. I=i/365x(days money is borrowed)x(amount borrowed) 12 Step Planning Process: 1) Establish short-term and long-term business performance and personal goals. 2) Prepare a balance sheet, income statement, and statement of cash flows for the previous year. 3) Determine the marketing and price outlook or projections for each of the major commodities. 4) Develop a preliminary marketing plan. 5) Determine optimal levels of inputs and output from each commodity, based upon production function principles. 6) Combine production plans for each commodity and develop an optimal whole-farm or whole-ranch plan based upon projected input and output prices and resource constraints. 7) Prepare a projected whole-farm or whole-ranch budget (or preliminary projected income statement) from the production plan prepared in step 6. 8)
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This note was uploaded on 10/18/2008 for the course AGEC 402 taught by Professor Bertrand during the Spring '08 term at McNeese.

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AgEcon Final Review - AgEcon Final Review Wednesday May 10,...

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