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    Agricultural Lending and Analysis

    Wednesday, February 28, 2018 - 11:00 AM - 12:30 PM ET
    $249.00
    *
    Upon completion of this webinar, participants will be able to: • Understand of the circumstances leading up to current loan repayment problems • Recognize the benefits of preparing an income statement in addition to a projected cash flow statement for agricultural operations • Understand the magnitude of the difference between net farm income calculated using the cash basis schedule F of the income tax return and accrual-adjusted net farm income • Learn how to access a “free” spreadsheet that can be used to prepare an accrual-adjusted income statement • Learn comparative data sources that can be used to assess financial performance • Learn the effectiveness of changes in operating strategies and loan terms on repayment capacity

    This is a rebroadcast of a program that was recorded on the 12th of December 2017. 

    Overview

    Agricultural producers often show a loss on their income tax returns in order to minimize their tax obligations; and then assume, and assure the lender, the operation is doing fine. However, during periods of low net farm incomes, such as we are currently experiencing in agriculture, it is essential to use a more accurate measure of firm profitability. It is common to see the difference between cash net farm income and accrual-adjusted net farm income to be more than 50 percent. 

    The session presents a spreadsheet that prepares an accrual-adjusted income statement. The resulting profitability information helps determine possible problem areas going forward. Finally, a comparison is presented of the effectiveness of changes in selected operating and loan terms on loan repayment capacity

    In this webinar, you will learn about different types of risks, how to manage and price risk, and how to stress test your agricultural loan portfolio to measure and mitigate risk.

    Covered Topics

    • The agricultural environment during the period of relatively high commodity prices and the resulting decisions to purchase capital items, which continue to have principal payments during the current low net farm income years
    • Benefits of preparing an income statement for agricultural businesses
    • Benefits of preparing a quarterly or monthly projected cash flow statement during the current situation rather than an annual projected cash flow statement
    • Magnitude of the differences between net farm income calculated using a cash basis schedule F versus net farm income calculated using an accrual-adjusted income statement
    • Spreadsheet that is available to prepare an accrual-adjusted income statement
    • Comparative data that can be used to determine potential problem areas
    • Effectiveness of changes in operating strategies and loan terms on repayment capacity 

    Who Should Attend?

    • Senior loan officers who supervise loan officers who make loans to agricultural producers
    • Loan officers who make loans to agricultural producers
    • Credit analysists who analyze agricultural loans
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    This is a rebroadcast of a program that was recorded on the 12th of December 2017. 

    Overview

    Agricultural producers often show a loss on their income tax returns in order to minimize their tax obligations; and then assume, and assure the lender, the operation is doing fine. However, during periods of low net farm incomes, such as we are currently experiencing in agriculture, it is essential to use a more accurate measure of firm profitability. It is common to see the difference between cash net farm income and accrual-adjusted net farm income to be more than 50 percent. 

    The session presents a spreadsheet that prepares an accrual-adjusted income statement. The resulting profitability information helps determine possible problem areas going forward. Finally, a comparison is presented of the effectiveness of changes in selected operating and loan terms on loan repayment capacity

    In this webinar, you will learn about different types of risks, how to manage and price risk, and how to stress test your agricultural loan portfolio to measure and mitigate risk.

    Covered Topics

    • The agricultural environment during the period of relatively high commodity prices and the resulting decisions to purchase capital items, which continue to have principal payments during the current low net farm income years
    • Benefits of preparing an income statement for agricultural businesses
    • Benefits of preparing a quarterly or monthly projected cash flow statement during the current situation rather than an annual projected cash flow statement
    • Magnitude of the differences between net farm income calculated using a cash basis schedule F versus net farm income calculated using an accrual-adjusted income statement
    • Spreadsheet that is available to prepare an accrual-adjusted income statement
    • Comparative data that can be used to determine potential problem areas
    • Effectiveness of changes in operating strategies and loan terms on repayment capacity 

    Who Should Attend?

    • Senior loan officers who supervise loan officers who make loans to agricultural producers
    • Loan officers who make loans to agricultural producers
    • Credit analysists who analyze agricultural loans
    Presenter:

    Freddie L. Barnard

    Freddie L. Barnard, Professor Emeritus of Agricultural Economics at Purdue University, is a native of Kentucky and received both a B.S. and M.S. in agricultural economics from the University of Kentucky.  He received a Ph.D. in agricultural economics from the University of Illinois. He retired June 30, 2017 after serving on the faculty at Purdue University for more than 35 years, where he had Extension and undergraduate teaching responsibilities in agricultural finance and agribusiness management. He also served as Director of the Midwest Agricultural Banking School, which is held each year at Purdue University, a position he held for 36 years.  Finally, he served on the Technical Committee of the Farm Financial Standards Council and as Secretary/Treasurer of the Indiana Chapter of the American Society of Farm Managers and Rural Appraisers.