EVALUATION TIME FOR YOUR FARM RECORDS Virgil E. Crowley 1987 is now history and you '-A arc starling a new year At this stage it is a year of pro- —• J misc and hope, with oppor tunnies to prove both your business and qual ity of life. In order to take advan tage of those opportunities you must be able to rccogni/c them. You need to review your ’B7 records to help determine where the opportunities for improving your business exist Biq Dutchmans FULL LINE OF RUGGED HOPPER BOTTOM BULK For Any Feed S Application. Two competitive!} priced bin lines are available with diamc tersof 6 7,8,9, and 12 , and storage capacities of 3 to 51.3 tons The Lifestyle line has 2 66 corrugation, with a 32 sheet height, while the Premier line has a 4 corrugation, with a 44 sheet height Both lines have 16 or 22 hopper openings If you are interested in a bin with state of the art" structural design at a very competitive price, we encourage you to write or call today TUT HERSHEY EQUIPMENT ri [COMPANY, INC. Diiigiura if Qiillty Syttim* fir Rmtoy, Sarin* and Grim Hindmj Do your records provide you with that kind of information? If not, now would be the ideal time to set up a new record system or improve the one you have been usmg.What type of record system arc you cur rently using a cash system, an accrual system, or a combination cash and accrual system? One of the latter two would be preferred. Regardless of which system is being used, the key is how you use the records you keep. If you arc like most businesses and use records both for tax reporting and management decisions, then you may want to review your records to see if they arc sufficiently com plete. Arc you really keeping a set of records, or only the financial BUNS > Isuj Dutchman* transactions of the business'' An accounting system keeps track of the financial transactions, a record system keeps track of the financial transactions and the factors that affected them For example, the grain farmer might simply record 10,000 bushels of No 2 com sold on a specific date to company x for so much per bushel. The costs such as seed, fertilizer, fuel and labor required to produce the com arc also recorded These arc financial transactions and provide sufficient information for tax purposes. However, it is not enough informa tion for management decisions. If the grain farmer in this example also had kept a field record which would show when the com was planted, what varieties were planted, what the fertilizer applica tions were, notations concerning rainfall and temperature, the date harvested and yield per acre, then he would have a set of farm records. You could apply this same kind of detail to the livestock enterprise. For example, the dairy man only must record the amount of milk, dairy products and cull cows and calves sold. Again the costs of feed, labor, veterinary ser vices, trucking, utilities and etc would be recorded. However, again the information provided is not enough for good management SYCAMORE INO PARK 255 PLANE TREE DRIVE LANCASTER PA 17603 (717) 393 5807 wn tSr* -JS Route 30 West at the Centerville Exit decisions What were the feed rations, how much was fed to each cow, what quality of hay and silage was fed 9 What were the average pounds of milk sold per cow, per centage calf crop and days each cow was in lactation? Knowing what our financial returns arc usu ally isn’t enough information. We need to know what the cash flow of the business is, and what rate of return is being earned on the assets in the business, and what the return to our equity is. Arc your records sufficiently com plete to provide the information needed to calculate these factors 9 Also, today, most financial institu tions place a great deal of emphasis on profitability. The calculation of true profitability requires either an accrual record system or a combi nation cash and accrual sys tcm.Thcrc is one additional task that the operator should manage in the recordkeeping area, regardless of what record system is used. That task is the development of an annu al cash flow projection. Because the cash flow is so essential to the survival of the business, it is important for every farm operator to learn how to make a cash flow projection for the farm busi ness The cash flow projection is an utdimait V Lancaster Farming, Saturday, March 12, 1988-E5 attempt to estimate as accurately as possible all cash that will be avail able to the farm business for the year, approximately during what periods pf the year it will be received, and how much will be available m each period. The pro jccuon deals not only with cash that will be available, but also with how much cash will have to be paid out dunng the year. Again an attempt is made to estimate what month payments will be made and how much. Obviously a good set of records from past years is the best source of information for pre paring a cash flow statement. There is no question that deve loping a cash flow statement involves many uncertainties, but these uncertainties arc no more dif ficult to deal with than arc evalua tion problems. A major factor that impacts return on assets and on owner's equity is the value placed on the assets. For example, what value is placed on the land, the livestock, machinery and equip ment? The return on investment and return to owner's equity can be significantly influenced by the val ues placed on assets in the inven tory. In all probability, cash flow projections carefully prepared can be as accurate as inventories. These areas of uncertainties arc not likely to be eliminated, but that docs not diminish the importance of records. It only emphasizes that record systems need to be eva luated frequently to determine if they arc providing you with the information you need and want. With the changes in the tax law and increased emphasis on profitabili ty there is not question but that the importance of records will increase in 1988. What better umc to check vours than now? BUS. 215-286-5370 /f?n\ RES. 215-445-4004 /||| \ BRICK LANE Lffl-I WOODWORKS SpecWWng in Utility Sheds & Uwn Furniture Call For Free Brochure With Prices R.D. 2, Etverson, PA 10520 EAR CORN Paying Top Prices For Good Quality Ear Corn Wet or Dry No Quantity too large or too small Fast Unloading - Dump on Pile & Go Easy access - 2.2 miles off 283 bypass- Manheim, Mt. Joy exit Daily Receiving 7:30 A.M. to 5 P.M. - un loading evenings & Saturdays by appt. Trucks available for pick up at your farm. Call Anytime For Price 717-665-4785 JAMES E. NOLL GRAIN
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