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Solvency

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Having assets in excess of liabilities; able to pay one's debts

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Liquidity

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easily converted to cash. A high volume of activity in a market

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Current Ratio

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Is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities.

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Depreciation

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A reduction in the value of an asset with the passage of time, due in particular to wear and tear. Decrease in the value of a currency relative to other currencies.

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Tariff

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A tax or duty to be paid on a particular class of imports or exports.

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Subsidy

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A sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.

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Import

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Sales of goods or services brought in from abroad, or the revenue from such sales.

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Accrued

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Make provision for, at the end of a financial period for work that has been done but not yet invoiced.

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Bartering

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The action or system of exchanging goods or services without using money.

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Export

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Sending of goods or services to another country for sale.

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Short run production period

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Is a period of time in which the quantity of at least one input is fixed and the quantities of the other inputs can be varied.

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Entrepreneur

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A person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

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Escrow

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A deposit or fund held in trust or as a security to pay things such as insurance or taxes.

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Law of Supply (know how to make chart)

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States that (all other things unchanged) an increase in price results in an increase in quantity supplied.

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Law of demand

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Is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher.

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Net worth

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Is the total assets minus total outside liabilities of an individual or a company.

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W-2 (1099) (1040)

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Is used to report wages paid to employees and the taxes withheld from them.(1099)- series is used to report various types of income other than wages, salaries, and tips. (1040)- collects information about the taxpayer's, dependents, income items, and adjustments to income. Calculates the allowable deductions and credits, tax due given the income figure, and applies funds already withheld from wages or estimated payments made towards the tax liability.

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Diminishing returns

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Used to refer to a point at which the level of profits or benefits gained is less than the amount of money or energy invested each unit of a certain input.

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Tangency

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adjacent

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Liability

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A debt or financial obligation. A current obligation of an entity arising from past transactions or events

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Asset

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Property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.

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Revenue

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Is income that a company receives from its normal business activities, usually from the sale of good and services to customers.

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Short term asset

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An asset expected to be converted into cash in the next year.

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Long term asset

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A stock, bond or other asset that an investor plans to hold for a long period of time.

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Intermediate

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Are those assets that are used or held in the farm business between 2-10 years.

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Debt to asset ratio

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Total liabilities divided by total assets.

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Market value

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The amount for which something can be sold on a given market.

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Cost value

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The value for which an asset was acquired.

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Net worth statement

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A financial statement that lists an individual's businesses or family's assets and liabilities and their values as of a specific date. The excess of total assets over total liabilities is a residual amount otherwise known as net worth.(aka balance sheet)

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Farm income statement

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Measures the profitability of a farm business for a particular period of time, usually one year.

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cash flow budget

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A financial statement reflecting the projected sources and uses of cash over a period of time. Items on the statement are usually categorized as business or nonbusiness with subdivisions for funds from business operations and funds from financing.

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Balance sheet

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A statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.(aka net worth statement)

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Franchise

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An authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities providing a broadcasting service or acting as an agent for a company's products.

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Corporation

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A company or group of people authorized to act as a single entity and recognized as such in law.

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Partnership

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Is an arrangement where parties agree to cooperate to advance their mutual interests.

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Sole proprietorship

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An unincorporated business with a sole owner in which the owner may be personally liable for business debts and claims against the business.

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Trade deficit

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The amount by which the cost of a country's imports exceeds the value of its exports.

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Break even

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The point or state at which a person or company makes the same as it is spending.

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Opportunity cost

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Is the cost of any activity measured in terms of the value of the next best alternative forgone.

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Capital asset

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Land, structures, equipment, and have an estimated useful life of 2 years or more.

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Gross revenue

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Income received for goods and services over some given period of time.

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Working capital

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Is the amount by which total short term assets exceeds total short term liabilities.

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Subchapter S

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Is a corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code.

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Price floor

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Is a government, or group imposed limit on how low a price can be charged for a product.

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Price ceiling

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Is a government-imposed limit on the price charged for a product. Governments intend price ceilings to protect consumers from conditions that could make necessary commodities unattainable.

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Marginal revenue

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Is the additional revenue that will be generated by increasing product sales by 1 unit.

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Capital gain

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Is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the amount realized on the disposition exceeds the purchase price.

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Owners equity

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The residual interest in the assets of the enterprise after deducting all its liabilities.

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Variable inputs

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inputs that will not be purchased if item is not produced

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Fixed inputs

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inputs that are purchased whether items are produced or not

Farm Business Management Terms – Flashcards

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