Recording the current portion of loans

AgExpert Analyst doesn't automatically track the current portion of loans. Financial institutions often require this information to perform a quick liquidity check when reviewing a loan application. Farm owners also use this information in managing their current liabilities.

The current portion of loans for the current fiscal year must be configured in the chart of accounts for AgExpert Analyst to accurately report the information when you're using the Financial Ratios management tool.

These new accounts will provide additional financial information used to generate the following ratios:

Liquidity ratios

Acid Test - a measure of the proportion of cash (or equivalents to cash) to current liabilities. Cash equivalents are any current assets that can be immediately converted into cash without disrupting normal operations. It doesn't include inventories and other assets not easily converted to cash.

Ratio = Cash Equivalents/Current Liabilities

Current ratio – a farm’s ability to meet financial commitments as they're due without disrupting the business operations

A business is considered liquid with a ratio of 1 or greater.

Ratio = Current Assets/Current Liabilities

Debt structure ratio – the proportion of total debt due and payable within the current year

Ratio = Current Liabilities/Total Liabilities

Last updated on August 19, 2014 by FCC AgExpert