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Rutgers Cost Accounting Program Now Tracks Cash Flows

Robin Brumfield

Summary

Financial skills are extremely important in today’s farm economy. The Rutgers Cost Accounting program helps farmers easily input all of their cost information from their balance sheet and income statement to help utilize all the necessary items productively. The program was originally designed for greenhouse cost accounting, but now that many farms are diversified with greenhouse and outdoor crops, it can now benefit outdoor crop uses. Producers input information from the income statement and balance sheet, and the program calculates 17 key financial rations, which growers can track over time. The newest feature of the program is a twelve-month cash flow statement that can be very beneficial to the women farmers in Annie’s Project.

Cash flow planning is a projection of costs in and out of the business during a specific period. It improves operating performance by simplifying cash analysis to operating, investing, and financing activities. Also, it eliminates potential financial problems by alerting the farm manager about possible changes in assets, equity, and liabilities.These plans are an important tool for evaluating the liquidity of a farm business and determining the operation of receiving and paying back loans. Since profitable firms can still fail because of misuse of cash, producers must buy inputs and grow crops before they are sold and have a cash inflow. Lenders usually want to evaluate the projected cash flow when making loan decisions and owners will want to have a line of credit or operating loan to cover short falls. The productive program captures the farm’s ability to pay bills and create profit in an effective manner.

Details

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