Balance Sheet Exercise #1:

Please examine the balance sheet and financial ratios in Tables 3 and 4. Evaluate whether the balance sheet indicates any areas of concern. If so, what would your recommendation be? Please write your answers in Table 5.

Table 3. Balance Sheet for a 256-acre Catfish Farm, December 31.

Item / Total Value
Assets
1. Current Assets
Cash on deposit / $15,849
Checking account balance / 0
Accounts receivable / 0
Fish inventorya / $150,000
Total Current Assets / $165,849
2. Non-Current Assets
Equipment / $387,570
Ponds / $357,888
Wells / $48,000
Land / $210,432
Total Non-current Assets / $1,003,890
3. Total Assets / $1,169,739
Liabilities
4. Current Liabilities
Payments on debt due and payable over next year
Equipment / $150,000
Real estate / $38,216
Total Current Liabilities / $188,216
5. Non-Current Liabilities
Equipment loan / $168,858
Real estate loan / $254,772
Total Non-Current Liabilities / $423,630
6. Total Liabilities / $611,846
7. Net Worth (3-6) / $557,893

a4500 sub-marketable fish/acre at 0.33 lb each @ 0.70/lb.

Table 4. Financial Ratios that Measure Solvency and Liquidity from Balance Sheet for a 256-acre Catfish Farm.

Ratio / Value
Solvency
Debt/asset ratio / 0.52
Equity/asset ratio / 0.48
Debt/equity ratio / 1.10
Debt structure ratio / 0.31
Liquidity
Current ratio / 0.88
Working capital / -$22,367

Table 5. Please fill out the following based on your assessment of the balance sheet in Tables 3 and 4.

Question / Answer
1. Does the balance sheet in Table 3 show any areas of concern?
2. If so, what are these?
3. What would your recommendations be for this farm?

Balance Sheet Exercise #2:

Please examine the balance sheet and financial ratios in Tables 6 and 7. Evaluate whether the balance sheet indicates any areas of concern. If so, what would your recommendation be? Please write your answers in Table 8.

Table 6. Balance Sheet for a 256-acre Catfish Farm, December 31.

Item / Total Value
Assets
1. Current Assets
Cash on deposit / $15,849
Checking account balance / 0
Accounts receivable / 0
Fish inventorya / $95,000
Total Current Assets / $110,849
2. Non-Current Assets
Equipment / $387,570
Ponds / $256,000
Wells / $48,000
Land / $210,432
Total Non-current Assets / $902,002
3. Total Assets / $1,012,851
Liabilities
4. Current Liabilities
Payments on debt due and payable over next year
Equipment / $72,368
Real estate / $38,216
Total Current Liabilities / $110,584
5. Non-Current Liabilities
Equipment loan / $360,000
Real estate loan / $555,000
Total Non-Current Liabilities / $915,000
6. Total Liabilities / $1,025,584
7. Net Worth (3-6) / -$12,733

a4500 sub-marketable fish/acre at 0.33 lb each @ 0.70/lb.

Table 7. Financial Ratios that Measure Solvency and Liquidity from Balance Sheet for a 256-acre Catfish Farm.

Ratio / Value
Solvency
Debt/asset ratio / 1.01
Equity/asset ratio / -0.01
Debt/equity ratio / -80.55
Debt structure ratio / 0.11
Liquidity
Current ratio / 1.00
Working capital / $265

Table 8. Please fill out the following based on your assessment of the balance sheet in Tables 6 and 7.

Question / Answer
1. Does the balance sheet in Table 6 show any areas of concern?
2. If so, what are these?
3. What would your recommendations be for this farm?

Balance Sheet Exercise #3:

Please examine the balance sheet and financial ratios in Tables 9 and 10. Evaluate whether the balance sheet indicates any areas of concern. If so, what would your recommendation be? Please write your answers in Table 11.

Table 9. Balance Sheet for a 256-acre Catfish Farm, December 31.

Item / Total Value
Assets / Year 1 / Year 2 / Year 3
1. Current Assets
Cash on deposit / $15,849 / $15,849 / $15,849
Checking account balance / 0
Accounts receivable / 0
Fish inventorya / $266,112 / $266,112 / $266,112
Total Current Assets / $281,961 / $281,961 / $281,961
2. Non-Current Assets
Equipment / $387,570 / $290,678 / $232,542
Ponds / $357,888 / $357,888 / $357,888
Wells / $48,000 / $48,000 / $48,000
Land / $210,432 / $210,432 / $210,432
Total Non-current Assets / $1,003,890 / $1,188,959 / $1,130,823
3. Total Assets / $1,285,851 / $1,188,959 / $1,130,823
Liabilities
4. Current Liabilities
Payments on debt due and payable over next year
Equipment / $72,368 / $72,368 / $72,368
Real estate / $38,216 / $38,216 / $38,216
Total Current Liabilities / $110,584 / $110,584 / $110,584
5. Non-Current Liabilities
Equipment loan / $168,858 / $160,360 / $152,342
Real estate loan / $254,772 / $242,033 / $229,932
Total Non-Current Liabilities / $423,630 / $402,393 / $382,274
6. Total Liabilities / $534,214 / $512,977 / $492,858
7. Net Worth (3-6) / $751,637 / $675,982 / $637,965

a4500 sub-marketable fish/acre at 0.33 lb each @ 0.70/lb.

Table 10. Financial Ratios that Measure Solvency and Liquidity from Balance Sheet for a 256-acre Catfish Farm.

Ratio / Value
Solvency / Year 1 / Year 2 / Year 3
Debt/asset ratio / 0.42 / 0.43 / 0.44
Equity/asset ratio / 0.58 / 0.57 / 0.56
Debt/equity ratio / 0.71 / 0.76 / 0.77
Debt structure ratio / 0.21 / 0.22 / 0.22
Liquidity
Current ratio / 2.55 / 2.55 / 2.55
Working capital / $171,377 / $171,377 / $171,377

Table 11. Please fill out the following based on your assessment of the balance sheet in Tables 9 and 10.

Question / Answer
1. Does the balance sheet in Table 9 show any areas of concern?
2. If so, what are these?
3. What would your recommendations be for this farm?