第十一章 信用分析

1. 第十一章 信用分析 to integrate the analysis concepts of Chap 6~10 to demonstrate how to use the data and concepts of earlier chapters to make decisions about the credit worthiness of individual farmers. purpose : Credit Analysis

2. current assets ↓ real-estate assets ↑ p.200 ($18,000 - $5,00)*0.3292 = $4280 12%, 4 p.201 Table 11.1 from p.154 Tables 8.2 8.3 ratio: p.161 Table 8.5 p.172 Table 9.2 , p.175 Table 9.4 Assets : Total assets ↑ 80% Liabilities : current liabilities ↑, total liabilities ↑ 250% Net Worth : net worth ↑ 30% earned net worth = net worth-appreciation in real estate (↑not so much as net worth↑)

3. Security ratios : current ratios↓, net capital ratio↓ in 1982 intermediate ratio↓, debt-equity ratio↑ then change little Earnings : Cash receipts↓ (∵commodity prices ↓) Cash expenses stable net farm income ↓ Business Performance Ratio : operating & fixed ratios ↑ capital turnover ratio & rate of return on capital ↓

4. Efficiency ratios: gross income per man-year↓ in 1982, stable later gross income per $1 expense ↓ machinery & power cost/acre ↑ In general, progress in the form of earned net worth, but the liquidity position has deteriorated dramatically. The real key to successful credit extension and utilization is the repayment capacity.

5. Analyzing Repayment Capacity Self-liquidating loan 自償性貸款： The loan which is made to acquire goods or services that are completely expended or used up in the production process Seed -- one production period machinery -- several years Loans for operating expenses are self-liquidating providing the business is profitable. p.168 ∵Gross income - operating expenses = net operating income ↓ includes seeds net operating income-fixed expenses = net farm income ↓ includes depreciation, interests

6. Similarly, the original capital investment in intermediate assets (such as machinery) and in improvements (such as buildings) is returned to the operator over years as part of gross income. If repayment is scheduled to coincide with return of the original capital investment, loans for such purposes also are self-liquidating. However, repayment of loans for intermediate-term purposes usually is scheduled at a somewhat faster rate than the rate of depreciation ; therefore, such loans are partially self-liquidating. Note that the key assumption is that the business is profitable. ∵Funds used to acquire goods and services that are expended in the production process are recouped as part of gross cash income when farm products are sold.

7. Not Self-liquidating loans 非自償性貸款： A loan which is made to acquire goods that are not expended or used up in the production process. eg: A loan to purchase good land. They must be repaid from net cash income. In general, loan repayment terms should be coordinated with the use made of the loan proceeds and with the amount of cash available for debt serving. For self-liquidating loans, the repayment period should range from few months to 10 yrs. or longer, depending upon how quickly the assets involved are used up in the production process.

8. The repayment period for loans that are not self-liquidating should be at least 20 yrs. The cash flow data is useful in estimating annual debt servicing capacity. The key in this estimation is to project annual cash income and annual cash expenses, using prices, productivity, and volume of business expected. p.192 cash inflow - cash outflow net cash flow - family living expenses - annual principal payments amount of uncommitted cash that could be used for servicing new 中長期 debt. Obligations If > annual debt serving requirement, the loan (if is self - liquidity loan) is O.K

9. But note that the farm does not have a strong liquidity position, and the operating credit line has been expanding. The lender may request that any excess cash above family living and current obligations be used to reduce the size of the operating credit loans. Once better balance between the current assets and current liability is obtained, funds would be available to support am intermediate-term loan. The source of funds for the down payment ? To improve the liquidity position and reduce the potential repayment problems in his operation, Mr. Performance may want to consider refinancing some short-term and intermediate-term obligations on a long-term basis, using the land as security.

10. Debt Structure and Balance In general, if credit is used to acquire intermediate-term or long-term asset, it should be repayable on the same basis. If shout-term credit is used to acquire intermediate-term assets. it is extremely difficult to generate sufficient cash flow from the use of those assets to repay the debt. An imbalance in the balance sheet can result from using too much short-term assets into intermediate-term and long-term assets without restricting the liability side. This is a common occurrence for farmers during the expansion process.

11. credit to purchase credit in reserve example, p.211 Table 11.4 current assets → intermediate-term assets Credit reserves - the amount of credit that is not used but could be available if needed. total credit Problem loans are frequently the result of : inefficient farm business unrealistic price and yield estimates inadequate repayment plans uncontrolled living expenses rapid payoff of capital loans excess expenditures on improvements multiple sources of credit lack of communication inadequate records