The first line of any cash flow statement is usually the beginning cash balance for the period

The first line of any cash flow statement is usually the beginning cash balance for the period

HANDOUT 1. Projected Cash Flow Statement

That balance includes all readily available funds (i.e., checking accounts, cash, mutual funds with checkwriting privileges, or arrangements for transferring funds to a checking account, etc.).

The next subsection is labeled livestock and feed purchases (lines 16 and 17) and includes cash expenses for feeder livestock as well as for purchasing breeding livestock

The next section is the receipt section, which is divided into three subsections: operating receipts, capital receipts, and nonfarm income. Operating receipts (lines 2-5) include receipts from crops, livestock, custom work, government payments, hedging account withdrawals, and any other cash receipts no credit check payday loans Jefferson City TN to the farm business. Each projected cash receipt is entered in the quarter that the cash is expected. It is usually a good idea to include several blank lines throughout the form (line 5 for example), so that the statement can be tailored to meet your needs.

Capital receipts (lines 6-8) are cash inflows from the sale of capital items, such as breeding livestock, machinery, and equipment. Also, only the amount of cash expected to flow into the operation is entered. If farmer A expects to trade a boar to farmer B and receive $50 in cash plus his new boar, only the $50 is entered in farmer A’s projected cash flow statement. That amount is entered in the quarter that the cash is expected.

Nonfarm income includes off-farm wages (line 9) and cash received from interest payments, dividends, and other nonfarm sources. The total cash available for the quarter (line 10) is then calculated by adding the beginning cash balance, operating receipts, capital receipts, and nonfarm income.

The expense section is divided into four subsections: operating expenses, livestock and feed purchases, capital expenditures, and other expenses. Operating expenses (lines 11-14) include such things as seed, fertilizer, breeding expenses, real estate and property taxes, insurance, utilities, and veterinary. The amount for each item is entered in the quarter when it is expected to be paid, which may be different from when you actually take possession of the item.

The third subsection is labeled capital expenditures (lines 18 and 19) and includes cash outlays to purchase machinery, equip ment, buildings, and improvements. If the dealer is to be paid in full and you borrow the money from another lender (i.e., commercial bank, PCA, etc.), the entire amount to be paid is entered in the appropriate quarter. The cash flowing into the operation from the loan will be discussed later.

Other expenses (lines 20-22) can include hedging account deposits, gross family living withdrawals, nonfarm business expenditures, and income tax and social security payments. Also included in this section are principal and interest payments due for intermediate and long-term loans. The total cash required for the quarter (line 23) is calculated by adding all expenses projected for the quarter.

Subtracting total cash required (line 23) from total cash available (line 10) yields the cash position before borrowing and inflows from savings. If the cash position is negative or below a specified amount, you can transfer any money available in savings to the checking account (lines 25 and 26).

If the cash position before borrowing and after savings (line 27), is still negative or below some specified amount, you must borrow those funds needed to satisfy the deficit and/or maintain the minimum amount desired in the checking account. Line 28 provides a place to enter operating, intermediate, and long-term borrowing.

A line is also needed to schedule principal and interest payments for operating loans (line 29), which lenders usually require to be repaid during the upcoming 12 months from the proceeds of the enterprises financed. For example, if operating funds are borrowed in the spring to plant the corn crop, those funds are usually scheduled to be repaid when the corn is expected to be sold. Of course, if the corn is stored and expected to be sold the next year, then the payment should be scheduled the next year.

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