Knowing the financial position of your farm operation is critical to its future success. One of the most important tools in helping you to understand the financials on your operation is the balance sheet. It depicts your financial position at a specific point in time.
Why Complete a Balance Sheet?
Since a balance sheet shows a snapshot of your operation, it is recommended to prepare a balance sheet as of December 31 each year. This allows you to see how your farm operation has changed and grown from year to year. Other benefits of completing a balance sheet each year include:
A balance sheet will help you understand your business better, which will allow you to make better management decisions on your farm operation for the future.
Information on the balance sheet can be used to calculate key financial ratios for your farm operation.
Lenders, such as AgChoice Farm Credit, need this information to assess your business and can expedite loan approval when completed accurately and as of December 31 of each year.
Interested in Learning More?
Learn more about balance sheets by viewing our video posted below and download our Building a Balance Sheet Guide that includes an interactive case study. Then, check your answers with the Balance Sheet Answer Key.