FINANCIAL MGMT IN AGRI
FINANCIAL MGMT IN AGRI AGEC 330
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This 4 page Study Guide was uploaded by Mr. Warren Barrows on Wednesday October 21, 2015. The Study Guide belongs to AGEC 330 at Texas A&M University taught by Danny Klinefelter in Fall. Since its upload, it has received 74 views. For similar materials see /class/225916/agec-330-texas-a-m-university in Agricultural & Resource Econ at Texas A&M University.
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Date Created: 10/21/15
Test Review 25 Attributes of the 2151 Century Farm Executive 1 9 9399 gt19 9 The top managers anticipate and adapt the changing needs of their markets a See themselves as sellers and their buyers as customers b Focused on producing value and not quantity c Always looking at emerging trends Open to exploring new ideas and different points of view Realize the importance of networking and developing alliances across the value chain Strategic thinkers The ability to objectively assess strengths and weaknesses in people including themselves Operate in continuous improvement mode Able to adapt to these changes are those who see things from a systems perspective and look at their farming operating as a biologically based manufacturing plant Always attempting to push the envelope back by trying something new or different but at the same time they are calculated risks Opportunistic Spend more time thinking about what if and developing contingency plans More likely to seek input and expertise from outside the business See change and challenges as opportunities and don t tend to view themselves as victims See themselves as a coach more than a boss Approach to business is more balanced between the business s key performance areas Spend a great deal of time on monitoring and analyzing performance Decisions are based more on reason and judgment and less on emotion Think outside of the box Effective communicators They set priorities and follow through with them Focus on the business s future Their passion and their attitude Excellent problem solvers Learned how to resolve con icts constructively Skillful negotiators Learned how to balance their lives The twelve loan questions bP N How much money are you going to need What is the money going to be used for How will the loan affect your financial position How will the loan be secured V39 How will the loan be repaid 6 When will the money be needed and when will it be repaid 7 Are your projections reasonable and supported by documented historical information 8 How will alternative possible outcomes affect your repayment ability 9 How will you repay the loan if the first repayment plan fails How much can you afford to lose and still maintain a viable operation What risk management measures have been or are to be implemented 12 What have been the trends in the business s key financial position and performance indicators o Five Credit Factors 1 The Human Management Factor 2 Financial Position and Progress 3 Repayment Capacity 4 Collateral 5 Loan Purpose Convertible Debt Advantages 1 Tax advantages 2 Security of debt safety for the investorpreference for liquidation 3 more exible 4 In theory the market price of a convertible debenture should never drop below its intrinsic value The intrinsic value is simply the Number of Shares Being Converted at Preferred Stock 1 Cumulative a If the dividend is not paid it will accumulate for future payment 2 Convertible a This type of preferred stock carries the option to convert into a common stock at a prescribed price 3 Participating a This type of preferred stock allows the possibility of additional dividend above the stated amount under certain conditions Analyzing Producer s Value Added Business Plans 1 Does the business plan articulate their strategy a Realistic b What ifs 2 Goals and objectives a Sales goals E 908994 0 NHHHHHHHHHH owoo ommet O39 b Breakeven levels of sales c Long term short term Market trends and forces a Social political and economic environment Are they going to be in the commodity or differentiated product business How is the market for their product segmented What is their value proposition and competitive advantage Do they have the management experience to be successful Is their already excess capacity How exible is the investment required Can they produce quality and quantity What about facilities Are their multiple suppliers Name Liabilities Exporting requirements iso 9000 Any contingent liabilities Issues if cooperative buy sell agreement Legal buy sell agreement Risks of government regulation Are their state or federal programs that they could take advantage of Importance of buy sell agreements l 2 4 d s a Death b Disability c Divorce Departureretirement Address problems or worst case scenarios Successful Family Business 1 Shared vision values and goals and a well formulated strategic plan a Reason for no strategic plan Requires sharing information Requires senior management to respond to the ideas of others and defend their own Increases the opportunity for con ict as a result of differences of opinion iv Requires commitment to the plan b SWOT analysis c BuySell agreement ii39 2 Clear Procedures and expectations regarding family participation in the business 0 a Employment of family members b Compensation c Honest performance appraisals Guidelines and a plan for management succession and continuity a Succession planning b Secrecy Participation by outside adVisors board members and managers Open communication and methods for resolVing con icts Ability to spend time and have fun outside of the business
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