Written by Dr. E. D. Hamilton, University of Nebraska-Lincoln Great Plains Veterinary Educational Center, February 14, 1996.

Transcription

1 SPA Calculations Written by Dr. E. D. Hamilton, University of Nebraska-Lincoln Great Plains Veterinary Educational Center, February 14, Owner Information. Name, mailing address with zip code, phone number, fiscal year of the analysis, herd name, and location of ranch. Production information should include the date the mature cows are exposed to the bulls, the length of the breeding season, the pregnancy check date if checked, the weaning date, and the beginning date for the calving season. The beginning of calving season is defined as the date the third mature cow calves. 1. Exposed Females - This is the number of females in the breeding herd. There are some adjustments that must be made. Do not include females exposed but not intended to be calved. Females transferred out of the breeding herd during breeding should not be included. Females transferred into the breeding herd during breeding should be included. 2. Pairs or Pregnant Females Sold/Transferred Out of Herd Before Weaning - You should only include known pregnant females or females which have calved and are removed as a pair (with live calf) before weaning. 3. Pairs or Pregnant Females Purchased/Transferred Into Herd Before Weaning - You should only include known pregnant females or females which have a live calf at side at the time of purchase/transfer. 4. Adjusted Exposed Female Inventory - This is an inventory of exposed females that results from the beginning inventory plus all adjustments. This is the divisor for weaning % and other reproduction and production measurements. 5. Total Head of Calves Weaned - This is a head count of all calves actually weaned during the weaning period. Do not include nursing calves removed before weaning as a cow-calf pair. Purchased grafted calves require some adjustments. The number of purchased grafted calves weaned should not be include in the reproductive measurements (calving %,weaning %). However, purchased grafted calves weaned are included in the revenue and pounds weaned sections. If purchased grafted calves are a part of this analysis, then you will need to adjust item 5 before calculating the weaning % in item 9. Item 5 may be entered based on sex of calves or as the total of all calves. 6. Total Pounds of Calves Weaned - Enter the total pounds weaned by calf sex or all calves. Include the weight of the purchased grafted calves. Do not include the weight of calves removed as pairs (not weaned). The weight should be determined at the time of weaning. These values may be determined by multiplying item 7 with item Average Weight of Calves Weaned - Enter the average weaning weight per calf by sex of calf or all calves. These values may be determined by dividing item 6 by item 5. If the weight for purchased grafted calves are included in item 6, then the herd count of calves weaned (item 5) must be adjusted to include purchased grafted calves. 8. Average Price per Pound of Calves - This value should be determined from the net weaned calf revenue divided by the total pounds weaned (item 6). The net weaned calf revenue should include

2 the net value of all weaned calves sold, a non-cash value for all retained calves at weaning, and a base value for all replacement calves weaned. 9. Percent Weaned Calves - (Item 5 divided by item 4) times 100 equals weaning percent. Do not include purchased grafted calves in item Total Dollar Value of All Calves Weaned - Item 8 times item 6. The value of purchased grafted calves weaned and the value at weaning of all retained calves should be included. This is the net value of the weaned calf crop. 11. Pounds Weaned per Exposed Female - Item 6 divided by item 4. This measurement includes the actual weaning weight of all weaned calves (include purchased grafted calves) in item 6. Item 4 is the adjusted exposed female count. 12. Total Acres - This is the total adjusted acres for grazing and raised feed land used by the cowcalf enterprise. This includes both owned and leased acres for grazing and raised feed land. The acres are adjusted for use by other enterprises. For example if a stocker enterprise utilizes some of the same acres used by the cow-calf enterprise then the acres shared by the two enterprises must be proportioned to each of the enterprises. 13. Total Breeding Females - This is the size of the cow herd. This determined by the head count of all exposed females, both mature cows and replacement heifers, still in the herd on the first day of the fiscal year. This represents the number of exposed females on the beginning balance sheet. SPA-EZ Financial Calculations -- Modified Cost Basis Balance Sheet Assets. Balance sheets are dated and should be for the first day and the last day of the fiscal year. These are the assets owned by the enterprise. If the use of the asset is shared by another enterprise, then its value must be prorated between the enterprises based on use. Assets are categorized as either current or non-current. The value of the asset should be its book value (original cost less accumulated depreciation) or base value (accumulated cost). 14. Feed Inventory - Feed inventory should include all feed in inventory (raised and purchased) on hand on the date of the balance sheet. The raised feed should be valued at its accumulated cost basis. If its cost value is not available, use its fair market value. If the types and quantity of feed is available, show the detail. The pounds of roughage should be calculated on an air dried basis. 15. Prepaid Expenses - These are expense items that have been paid for but not received and not used by the enterprise. They will be listed as a current asset. An example would be feed that was paid for before the end of the year but not in the beginning year feed inventory. 16. Cash (Checking, Savings, etc.) - This is the checking account balance on the date of the balance sheet as well as any savings accounts assigned to the enterprise. 17. Miscellaneous - All current assets not listed above should be entered here. Only list the value assigned to the cow-calf enterprise. 18. Total Current Assets - This is the total of the current assets listed above. 19. Machinery and Equipment - Enter the book value of all equipment and machinery used in the enterprise. If the equipment is used by more than one enterprise, proportion the value across the

3 enterprises involved. 20. Real Estate, Buildings, and Improvements - Enter the cost basis for the real estate and the book value for the improvements and buildings. Proportion the value to the amount utilized by the enterprise. For example, if the grazing acres are used by both a cow-calf enterprise and a stocker enterprise at the proportions of 70% and 30% respectively, then the cost value of the grazing acres should be proportion 70/30 also. Breeding Cattle. This is the inventory count and value of all females and males in the herd on the date of the balance sheet. If possible, break this down by age of animal. For example, a replacement heifer would have a different value than a mature cow. Purchased animals should be valued at their book value (original cost less accumulated depreciation) and raised animals should be valued at a base value. The base value for raised animals should approximate the accumulated cost to get the animals to that point. The base value should not change from year to year after it has been established. For example, if it has been established that for a given herd replacement heifers should be valued at $450 each, bred heifers valued at $550, and mature cows valued at $650, then these same values should be used each year and not changed over time or with changing market conditions. 21. Replacement Heifers (1 yr. olds) - Enter the head count and the base value of the raised replacement heifers for the date of the balance sheet. The total value should include the total value (using base value concept) of the raised replacement heifers plus the book value of the purchased replacement heifers. 22. Bred Heifers (2 yr. olds) - Enter the head count and the base value of the raised bred heifers for the date of the balance sheet. The total value should include the total value (using base value concept) of the raised bred heifers plus the book value of the purchased bred heifers. 23. Mature Cows - Enter the head count and the base value of the raised mature cows for the date of the balance sheet. The total value should include the total value (using base value concept) of the raised mature cows plus the book value of the purchased mature cows. 24. Bulls - Enter the head count and the base value of the raised bulls for the date of the balance sheet. The total value should include the total value (using base value concept) of the raised bulls plus the book value of the purchased bulls. 25. Other Non-Current Assets (Horses, etc.) - Enter the book value of all other non-current assets not listed above. 26. Total Non-Current Assets - This is the total value of all non-current assets. 27. Total Assets - This is the total value of all assets assigned to the cow-calf enterprise. Liabilities. These are the debts incurred by the enterprise. Proportion the debts according to the proportion used by the cow-calf enterprise. The debts are categorized into current and non-current liabilities. Use pre-tax values. 28. Current Liabilities - Enter the total of all accounts due, notes payable, accrued interest, accrued taxes, and current part of non-current debt. 29. Non-Current Liabilities - Enter the total non-current of all non-current debt. This would include

4 the non-current part of debt on equipment, real estate, livestock, machinery, etc. that is utilized by the cow-calf enterprise. 30. Total Liabilities - This is the sum of current and non-current liabilities. Deferred Taxes and Opportunity Cost are not included in this analysis. The analysis is a pre-tax financial analysis. The complete SPA analysis is needed to deal with this and other more detailed issues. SPA-EZ Financial Calculations -- Accrual Adjusted Income Statement Revenue. Both cash and non-cash revenues are recognized. Only revenue earned by the cow-calf enterprise during the fiscal year is accounted for. 31. Weaned Calves - The value of the weaned calf crop is given in item 10. This should be net amount less the cost of selling. Remember to include base value of replacement animals, noncash value of retained animals, and value of purchased grafted calves. Values are determined at weaning. 32. Gain/Loss on Culls - The gain/loss on culls must be determined from the value shown on the beginning balance sheet for that animal. The gain/loss is the net market value received less the value used on the beginning balance sheet (base value and/or book value). Enter the head count culled by category, the average price received per head, and the base value. Animals on the beginning balance sheet that die during the fiscal year will be shown as a loss in this section. The amount of the loss will be the value of that animal on the beginning balance sheet. 33. Change in Base Value - Enter the head count from the ending balance sheet that changed categories (animals that were on the beginning balance sheet and ending balance sheet). Enter the base value used on the beginning balance sheet and the ending balance sheet. Subtract the total for ending base value from the total for beginning base value. The change in base value is the difference between the established base values. For example, if replacement heifers, bred heifers, and mature cows are valued at $450, $550, $650 respectively, the change in base value is $100 for each category. If a replacement heifer is on the beginning balance sheet at $450, this heifer would be on the ending balance sheet as a bred heifer at $550. Thus, there is a $100 increase in base value that is recognized as noncash revenue on the income statement. The calculation requires multiplying the head count on the ending balance sheet that moved to the next age category (from beginning balance sheet) times the change in base value (i.e. $100). Total change in base value of each category is summed in item Other Non-Calf Revenues - Sum all miscellaneous revenues that are allocated to the cow-calf enterprise. Accrual adjustments to revenue are included in this item. For example the beginning accounts receivable is subtracted from the ending accounts receivable and the difference is included in item Total Revenue - This sum of revenues (items 31-34) with accrual adjustments. Expenses (Cash and Non-Cash). Proportion expenses to different enterprises if multiple enterprises exist. For example, only change the cow-calf enterprise for the purchased feed that was used by the enterprise. Do not charge for purchased feed that was used by the backgrounding enterprise. Categorize expenses if possible. Include in the Labor, Management, Family Living

5 category an expense for the labor the family members contributed to the cow-calf enterprise. The value should approximate the amount that would have been paid to a non-family member to perform the same job. The depreciation expense would include all depreciation (equipment, machinery, livestock, etc.) allocated to the enterprise based on its utilization by the enterprise (check balance sheet allocations). Changes in inventories/accounts are accrual adjustments that are very important to the analysis. The changes are calculated from the beginning and ending balance sheet differences for each category. For example, if the beginning balance sheet value for feed inventory is $50,000 and the ending balance sheet value for feed inventory is $30,000, then there is a decrease in feed inventory of $20,000 (charge in inventory). This decrease (negative change) in inventory would be added to the income statement as a positive number to show an increase in expenses. This logic should be followed for asset accounts such as inventories, accounts receivable, and notes receivable. A decrease in a liability account such as accounts payable, notes due, interest due, or taxes due would require a negative expense (decrease in expenses) on the income statement. 36. Total Expenses - This is the sum of all expenses with accrual adjustments. 37. Annual Cow Cost - Item 36 divided by item Non-Calf Revenue Adjusted Expenses - Item 36 minus items ( ). 39. Calf Breakeven - Item 38 divided by item Net Income per Cow - (Item 35 minus item 36) divided by item Total Net Income - Item 35 minus item Year Average Asset Value - (Item 27a plus 27b) divided by ROA% - [(Item 35 minus item 36 plus Interest) divided by item 42] times 100.