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Displaying 1 - 10 of 12
February 6, 2017
10 … wheat in Kansas based on the July futures KCBT contract
Prices … bushel)
$12.87
$11.36
$9.73
$8.85
$10.00
Coverage(per acre)
$412
$364
$311
$283
$320
22 …
June 8, 2016
KFMA Research
1
Adoption of Precision Agricultural Technology in Kansas
Terry Griffin (twgriffin@ksu.edu)
Kansas State University Department of Agricultural Economics – June 2016
http://www.agmanager.info/KFMA/Newsletters/Research/PrecisionAgAdoption.pdf
Executive Summary
In …
September 18, 2024
30,324 -3.8 835.1 -1.0 25,323 -4.8
2026
I … 3.3 833.8 -1.0 6,089 -4.3
II … CALF Market, as of 9/16/24
10/16/2024 Sell @ Weaning …
August 28, 2015
Financial Management
1
Using Solvency Ratios to Predict Future Profitability
Gregg Ibendahl (ibendahl@ksu.edu)
Kansas State University Department of Agricultural Economics ‐ August 2015
http://www.agmanager.info/KFMA/Newsletters/Research/SolvencyRatios.pdf
Executive Summary
Solvency ratios are normally used as an indicator of the long‐term viability of the farm business. Farms with
high leverage have a greater likelihood of going bankrupt. Bankruptcy occurs because a farm loses its equity.
However, for a farm to lose equity, it must generate negative profits, which might imply that highly leveraged farms
are earning less profit than those farms without debt. Thus it might be possible to predict future profitability based on
solvency ratios. This paper tests that hypothesis but finds a naïve model of looking at past profit to predict future
profits works the better than using solvency ratios.
Introduction
The Farm Financial Standards Council currently lists 21 ratios that can be used to evaluate a farm business.
Three of these ratios are solvency ratios. Solvency ratios assess the amount of debt capital used by a farm business
and help determine whether the business can meet long‐term obligations. Any business that uses debt capital incurs
an obligation to make principle and interest payments. If a business has too much debt, periods of low profitability
can lead to insufficient cash flow to cover the principle and interest. Thus, the use of debt increases the financial risk
of a farm business and the likelihood the farm business might become insolvent.
While solvency ratios are designed to measure a company’s financial health, can they also be used to predict
future profitability? Because debt capital introduces interest expense to a farm business, net farm income will be
lower compared to a farm with just equity capital (everything else being equal). Going forward though, future net
farm income might not always be lower for higher leveraged farms as these farms may have taken on more debt in
order to fund profitable segments of their business.
Another potential complication of using solvency ratios to predict future farm profitability is farmland
control. As land is the most valuable asset class on most crop farms, controlling that land is an important decision.
Few farms have enough of their own equity to supply all the land they need without either purchasing land with debt
capital or renting land. Farms that have taken on more debt to purchase land will need to rent less land than a similar
farm with lower debt levels and farming the same acreage base. The interest rate and the cash rental rate, determine
Kansas State University Department Of Agricultural Economics Extension Publication …
August 28, 2015
KFMA Research
1
Using Solvency Ratios to Predict Future Profitability
Gregg Ibendahl (ibendahl@ksu.edu)
Kansas State University Department of Agricultural Economics ‐ August 2015
http://www.agmanager.info/KFMA/Newsletters/Research/SolvencyRatios.pdf
Executive Summary
Solvency ratios are normally used as an indicator of the long‐term viability of the farm business. Farms with
high leverage have a greater likelihood of going bankrupt. Bankruptcy occurs because a farm loses its equity.
However, for a farm to lose equity, it must generate negative profits, which might imply that highly leveraged farms
are earning less profit than those farms without debt. Thus it might be possible to predict future profitability based on
solvency ratios. This paper tests that hypothesis but finds a naïve model of looking at past profit to predict future
profits works the better than using solvency ratios.
Introduction
The Farm Financial Standards Council currently lists 21 ratios that can be used to evaluate a farm business.
Three of these ratios are solvency ratios. Solvency ratios assess the amount of debt capital used by a farm business
and help determine whether the business can meet long‐term obligations. Any business that uses debt capital incurs
an obligation to make principle and interest payments. If a business has too much debt, periods of low profitability
can lead to insufficient cash flow to cover the principle and interest. Thus, the use of debt increases the financial risk
of a farm business and the likelihood the farm business might become insolvent.
While solvency ratios are designed to measure a company’s financial health, can they also be used to predict
future profitability? Because debt capital introduces interest expense to a farm business, net farm income will be
lower compared to a farm with just equity capital (everything else being equal). Going forward though, future net
farm income might not always be lower for higher leveraged farms as these farms may have taken on more debt in
order to fund profitable segments of their business.
Another potential complication of using solvency ratios to predict future farm profitability is farmland
control. As land is the most valuable asset class on most crop farms, controlling that land is an important decision.
Few farms have enough of their own equity to supply all the land they need without either purchasing land with debt
capital or renting land. Farms that have taken on more debt to purchase land will need to rent less land than a similar
farm with lower debt levels and farming the same acreage base. The interest rate and the cash rental rate, determine
Kansas State University Department Of Agricultural Economics Extension Publication …
January 15, 2013
http://www.agmanager.info/livestock/budgets/production/beef/Cow-
calf_EnterpriseAnalysis(Nov2012).pdf
3
As of: 1/14/13’
http://www.agmanager.info/livestock/marketing/graphs/cattle/prices/default.asp
ESTIMATED … Sep
Percent
Avg.
2006-
10
2011
2012
G-NP-3010/31/12
Livestock Marketing …
September 1, 2024
2024 Ag Lenders Conference Presentations
30,324 -3.8 835.1 -1.0 25,323 -4.82026I … 3.3 833.8 -1.0 6,089 -4.3II … ‐0.3CT 1.5NJ 2.5DE ‐1.3MD 10
7.7
C-N-3801/31/24
5.13 …
September 30, 2024
30,324 -3.8 835.1 -1.0 25,323 -4.8
2026
I … 3.3 833.8 -1.0 6,089 -4.3
II … CALF Market, as of 9/25/24
10/16/2024 Sell @ Weaning …
October 1, 2024
30,324 -3.8 835.1 -1.0 25,323 -4.8
2026
I … 3.3 833.8 -1.0 6,089 -4.3
II … CALF Market, as of 9/25/24
10/16/2024 Sell @ Weaning …
September 26, 2024
30,324 -3.8 835.1 -1.0 25,323 -4.8
2026
I … 3.3 833.8 -1.0 6,089 -4.3
II … CALF Market, as of 9/25/24
10/16/2024 Sell @ Weaning …