Let us help translate.
There are two basic financial reports: the income statement and the balance sheet.
The income statement lists all operations sources of income and all operating expenses by account as well as net profit, which is the difference between total revenue and total expenses.
The balance sheet lists all assets and liabilities as well as equity or net worth, which is the difference between assets and liabilities.
Let’s first consider the income statement. It is helpful not only to know not the amount of revenue and expenses coming through each account but also per-unit amounts such as averages per month, per acre, or per unit sold. This helps give context and meaning to your flow of revenue, expenses, and profits.
In your balance sheet, assets are usually listed in order of liquidity, and liabilities are organized with the soonest due listed first to the longest maturity loans last. Usually, assets and liabilities are grouped in two categories: current assets and liabilities matched with one another and non-current assets and liabilities listed last. Assets are typically listed on the left side of the page with liabilities and equity on the right. Your total assets should always equal total liabilities plus your equity or net worth.
AgriSolutions' financial consultants have been helping family farmers improve the financial management of their operations for nearly 50 years. Our financial consultants are trained to identify, measure, analyze, and interpret financial information to help owners effectively manage their businesses.
If you believe your operation could benefit from the services of an agriculture financial consultant, click the link below or call (618) 372-3000.