Balance Sheets & Barns: Your Path to a Career in Agriculture
By: Alex Iconomopoulos, AgCareers
At first glance, farming might seem like a hands-on, dirt-under-the-fingernails kind of job — far removed from spreadsheets and financial statements. But in reality, agriculture is a business, and like any business, it thrives on sound financial management.
If you're an accountant exploring a career in agriculture, your skills are not only relevant — they're in demand.
A farm has lots of costs associated with it. Evaluating the financial health of your business requires an understanding of the key financial statements: the balance sheet, income statement, and statement of cash flows.
The balance sheet displays assets, liabilities, and owners' equity, which is what the company owns and what the company owes.
The income statement displays revenue, expenses, cost of goods sold, and net income, which shows profitability.
The statement of cash flows displays operating, investing, and financing activities. Showing how money flows in and out of the business.
These tools help farmers make informed decisions, such as whether to invest in new equipment or expand operations.
Imagine a farm considering a new tractor that could boost productivity by 20%. Your accounting skills would help:
Use the income statement to project increased revenue
Review the balance sheet to assess current debt and available capital
Analyze the cash flow statement to ensure the farm can handle monthly payments
Your financial insight could be the difference between a smart investment and a costly mistake.
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