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Junior and Senior level Ag Bus. | |Colorado Agriscience Curriculum

|Section: |Advanced Agribusiness |

|Unit: |Management of Agricultural Business Records |

|Lesson Title: |Analyzing Financial Statements - Trends |

|Colorado Ag Education Standards|AGB11/12.03 - The student will be able to formulate and analyze financial records and use the information for|

|and Competencies |evaluation and planning. |

| | |

| |Use financial measures (ratios and trends). |

| | |

|Colorado Model Content |Math Standard 1: Students develop number sense and use numbers and number relationships in problem-solving |

|Standard(s): |situations and communicate the reasoning used in solving these problems. |

| | |

| |Math Standard 3: Students use data collections and analysis, statistics, and probability in problem-solving |

| |situations and communicate the reasoning used in solving these problems. |

| | |

| |Math Standard 6: Students link concepts and procedures as they develop and use computational techniques, |

| |including estimation, mental arithmetic, paper-and-pencil, calculators, and computers, in problem-solving |

| |situations and communicate the reasoning used in solving these problems. |

| | |

| |English Standard 1: Students read and understand a variety of materials. |

| | |

| |English Standard 4: Students apply thinking skills to their reading, writing, speaking, listening, and |

| |viewing |

| | |

| |English Standard 5: Students read to locate, select, and make use of relevant information from a variety of |

| |media, reference, and technological sources. |

| | |

|Student Learning Objectives: |The student will define a trend and a trend in agribusiness. |

| | |

| | |

| |The student will identify trends in evaluating financial statements and improving the health of the |

| |agribusiness. |

|Time: |50 minutes |

|Resource(s): |Casey, Jobes, Purcell, and Steward (1992). Farm and Ranch Business Management. Deere and Company Service |

| |Publications Department. Moline, Illinois. |

| |Doan’s Farm Management Guide 14th edition (1980), St. Louis, Missouri |

| |Decisions and Dollars (1993) National Council for Agriculture Education |

| |Herren and Donahue (1991). The Agriculture Dictionary, Delmar Publishing Inc. Albany, New York |

|Instructions, Tools, Equipment,|Italicized words are instructions to the teacher, normal style text is suggested script. |

|and Supplies: |PowerPoint Slides, Handouts, Test/Quiz |

|Interest Approach: |Slide 2 relates to the interest approach, lead the students in conversation on slide 2. Have one student |

| |write the list and positive/negative’s on the board |

| | |

| |Think of some trends among the people in this classroom |

| |Now think of some trends among the people in the school. |

| |What are some community trends? |

| |Which of these trends provide a positive influence? |

| |Which of these trends provide a negative influence? |

| |Move into slide 3 |

| |Students, |

| |Just as there are trends in society that are both positive and negative, there are positive and negative |

| |trends that affect an agribusiness. |

| |In this lesson, you will learn what trends are, and what they mean as far as evaluating financial statements |

| |and improving the health of the agribusiness. |

|Objective 1: |The student will define a trend and a trend in agribusiness. |

| | |

| |Move into slide 4 |

| |First, we need to know what the term trend actually means, so here is the definition. Write it |

| |down, you may need it later! |

| |A trend is a general direction in which something tends to move, a general tendency or inclination. |

| |The definition of a trend in the agribusiness is: A term usually applied to changes in production, prices of|

| |agricultural prices, or the direction of the financial health of a business. |

|Objective 2: |The student will identify trends in evaluating financial statements and improving the health of the |

| |agribusiness. |

| | |

| |Before you move to slide 5, ask the following question. Encourage class discussion by using the quick draw |

| |approach. You will need to facilitate this by calling on students quickly and writing their responses on the|

| |board. Students should know some of the answers from the Ratio Lesson. |

| | |

| |Move into slide 5 |

| | |

| |What are some financial statements do we use to track the trends of the agribusiness? |

| | |

| |Good Job, let us compare your answers with the examples used in this lesson. |

| |Net Worth Statement |

| |Current Asset Statement |

| |Non-Current Asset Statement |

| |Current Liability Statement |

| |Non Current Liability Statement |

| |Current and Non-Current Expense Statement |

| |Current and Non-Current Income Statement |

| |The easiest way to track trends is to use Ratios. |

| |Move to slide 6 |

| | |

| |Now we will evaluate how trends should be used to gain a better overall understanding of the health of an |

| |agribusiness. |

| | |

| |Trends should be evaluated over time using ratios. |

| |Trends can be evaluated on a short term basis |

| |The best evaluation of trends is conducted over a period of years – this provides the most complete picture. |

| |Trends should show positive growth and improvement of the health of an agribusiness. If the trend does not |

| |show positive growth, further investigation of the agribusiness is required. |

| | |

| |Move onto slide 7 |

| | |

| |Let us take a look at a specific example of a trend using a debt to equity ratio. |

| | |

| |Debt-to-Equity Ratio and trend |

| | |

| |Trend Example #1 |

| |2004 2005 2006 2007 |

| |2:1 2:1.1 2:1.4 2:1.7 2:1.9 |

| |In the above scenario, the debt-to-equity trend is showing an improvement over time. This shows that the |

| |health of the business is improving. The producer is investing more money over time into his business than |

| |his creditors. |

| | |

| |Trend Example #2 |

| |2004 2005 2006 2007 |

| |2:1 2:1.1 2:.9 2:.87 2:.5 |

| | |

| | |

| |In the above scenario, the debt-to-equity trend is showing a decline over time. This shows that the health |

| |of the business is not improving. The producer is investing less money over time into his business than his |

| |creditors. |

|Review/Summary: |Slide 8 |

| |Okay class now let’s go over what the three main topics of todays lesson are when I call on you please |

| |respond in a rapid manner with an answer. |

| |Trends can be used to make educated management decisions in the Agribusiness |

| |Trends are best utilized evaluating ratios over a period of time (preferably years) |

| |Trends are developed using ratios that are derived from several financial statements. |

| | |

|Application--Extended Classroom|Have students use the eyewitness e-moment to interview each other in groups of two on the information |

|Activity: |presented today. You could ask for a report from each student for class work. |

|Application--FFA Activity: |Have students conduct research on the trend of females assuming leadership roles in their chapter over the |

| |past five years. They can create a line graph in Microsoft Excel, which can be turned in for a grade. |

|Application--SAE Activity: |Have students evaluate the trend of their own debt-to-equity ratio on their individual SAE. |

|Evaluation: |See attached below. |

|Evaluation Answer Key: |Name:___________________ |

| |Date______________ |

| | |

| |Agribusiness Trends/ Test |

| |1) What is the definition of a trend in the agribusiness? |

| |The definition of a trend in the agribusiness is: A term usually applied to changes in production, prices of|

| |agricultural prices, or the direction of the financial health of a business. |

| | |

| |2) Name three of the seven financial statements we use to track the trends of the agribusiness. |

| | |

| |Net Worth Statement |

| |Current Asset Statement |

| |Non-Current Asset Statement |

| |Current Liability Statement |

| |Non Current Liability Statement |

| |Current and Non-Current Expense Statement |

| |Current and Non-Current Income Statement |

| | |

| |3) The easiest way to track trends is to use Ratios. |

| | |

| |4) The best evaluation of trends is conducted over a period of years – this provides the most complete |

| |picture. |

| | |

| |5) Trends should show growth and improvement of the health of an agribusiness. If the trend does not show |

| |growth, further investigation of the agribusiness is required. |

| | |

| |6) Determine if the following agribusiness is in a good, poor, or improving state of health by evaluating the|

| |trend. |

| | |

| |Write your answer here: good |

| | |

| |Debt-to-Equity Ratio and trend |

| | |

| |2004 2005 2006 2007 |

| |2.5:1 2:1.7 2:1.6 2:1.6 2:1.7 |

| | |

| |7) Determine if the following agribusiness is in a good, poor, or improving state of health by evaluating the|

| |trend. |

| | |

| |Write your answer here: improving |

| | |

| | |

| |Debt-to-Equity Ratio and trend |

| | |

| |2003 2004 2005 2006 2007 |

| |2.5:1 2.4:1 2.7:1 2:1.6 2:1.7 |

| | |

| | |

| | |

| | |

| | |

| | |

| |8) Determine if the following agribusiness is in a good, poor, or improving state of health by evaluating the|

| |trend. |

| | |

| |Write your answer here: Poor |

| | |

| | |

| |Debt-to-Equity Ratio and trend |

| | |

| |2003 2004 2005 2006 2007 |

| |2.5:1 2.6:1 2.7:1 2.8:1 2.9:1 |

| | |

| | |

| | |

| |9) Determine if the following agribusiness is in a great, good, poor, or improving state of health by |

| |evaluating the trend. |

| | |

| |Write your answer here: good |

| | |

| |Debt-to-Equity Ratio and trend |

| | |

| |2003 2004 2005 2006 2007 |

| |2:1 2:1.7 2:1.8 2:1.9 2:1.9 |

| | |

| | |

| |10) Determine if the following agribusiness is in a good, poor, or improving state of health by evaluating |

| |the trend. |

| | |

| |Write your answer here: good or great |

| | |

| | |

| |Debt-to-Equity Ratio and trend |

| | |

| |2003 2004 2005 2006 2007 |

| |2:1 2:1.5 2:1.7 1:1.1 1:1.7 |

Name:___________________

Date______________

Agribusiness Trends/ Test

1) What is the definition of a trend in the agribusiness?

2) Name three of the seven financial statements we use to track the trends of the agribusiness.

3) The easiest way to track trends is to use ______________________.

4) The best evaluation of trends is conducted over a period of ________________ – this provides the most complete picture.

5) Trends should show __________________ growth and improvement of the health of an agribusiness. If the ___________________ does not show positive growth, further investigation of the agribusiness is required.

6) Determine if the following agribusiness is in a good, poor, or improving state of health by evaluating the trend.

Write your answer here: ___________________

Debt-to-Equity Ratio and trend

2003. 2004 2005 2006 2007

2.5:1 2:1.7 2:1.6 2:1.6 2:1.7

7) Determine if the following agribusiness is in a good, poor, or improving state of health by evaluating the trend.

Write your answer here: _______________________

Debt-to-Equity Ratio and trend

2003 2004 2005 2006 2007

2.5:1 2.4:1 2.7:1 2:1.6 2:1.7

8) Determine if the following agribusiness is in a good, poor, or improving state of health by evaluating the trend.

Write your answer here: ___________________________

Debt-to-Equity Ratio and trend

2003 2004 2005 2006 2007

2.5:1 2.6:1 2.7:1 2.8:1 2.9:1

9) Determine if the following agribusiness is in a great, good, poor, or improving state of health by evaluating the trend.

Write your answer here: _______________________

Debt-to-Equity Ratio and trend

2003 2004 2005 2006 2007

2:1 2:1.7 2:1.8 2:1.9 2:1.9

10) Determine if the following agribusiness is in a good, poor , or improving state of health by evaluating the trend.

Write your answer here: ______________________

Debt-to-Equity Ratio and trend

2003 2004 2005 2006 2007

2:1 2:1.5 2:1.7 1:1.1 1:1.7

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