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Management Information Systems. Terry DeGroff Burwell, Nebraska Books, Records & Controls. Management is….

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Management information systems

Management Information Systems

Terry DeGroff

Burwell, Nebraska

Books, Records & Controls


Management is
Management is…

  • Planning, organizing, directing, and controlling a business. The most important and challenging is control… the process of analyzing, evaluating and interpreting the production and financial performance of a business.


Information
Information…

  • Can and does come from many sources. Some of the best and most needed information can come from each business’ own financial and production records.


Systems
Systems…

  • Need to be implemented that allow for only necessary record keeping and effective use of records. Summary information from these records should be invaluable in day to day business decisions.


Management

Planning

Organizing

Directing

Controlling

Management



Uses and purposes of financial records
Uses and Purposes of Financial Records

Management

Decision

Making

Income Tax

Reporting

Credit

Acquisition




Keys to successful record keeping2

Excessive detail often ends in Confusion, Frustration, and Failure

Keys to Successful Record Keeping


Keys to successful record keeping3
Keys to Successful Record Keeping Failure

  • Meet your Needs, Abilities, & Limitations


Keys to successful record keeping4

Know your Purpose for Keeping Records Failure

Keys to Successful Record Keeping

Management

Income

Taxes

Banking


Accounting rules

Standards of Communication Failure

Accounting Rules


Accounting rules1

Generally Accepted Accounting Principles Failure

(GAAP)

Accounting Rules


Keys to successful record keeping5

Accurately Match Expenses with Income Failure

Keys to Successful Record Keeping


Cash and accrual accounting
Cash and Accrual Accounting Failure

  • Refers to the timing of entries into the accounting system


Cash based records
Cash Based Records Failure

  • Transactions are recorded when cash is received or paid out


Accrual based records
Accrual Based Records Failure

  • Transactions are recorded when they take place

  • Regardless of whether cash is involved


Accrual adjusted statements
Accrual Adjusted Statements Failure

  • Cash based records are kept throughout the year

  • Non-Cash adjustments are made to the cash based income statement at the end of the year


Accrual adjusted income statement
Accrual Adjusted Income Statement Failure

  • Cash incomes and expenses must be adjusted by:

    • Changes in non-cash assets

      • Inventories

      • Pre paid expenses

      • Receivables

    • Changes in non-cash liabilities

      • Payables

      • Accrued interest


Financial analysis

Basic Set of Financial Statements Failure

Financial Analysis

Requires


Basic financial statements
Basic Financial Statements Failure

  • Balance Sheet

  • Income Statement

  • Statement of Owner Equity

  • Statement of Cash Flows


Assets liabilities equity
Assets = Liabilities + Equity Failure

Equity = Assets - Liabilities


Beginning Balance Sheet Failure

Ending Balance Sheet

Assets

Liabilities

Assets

Liabilities

Equity

Equity

  • +/- Net Income

  • +/- Valuation Changes

  • Capital withdrawals

  • + Capital contributions


Financial analysis1

Basic Set of Financial Statements Failure

Understanding of how to Analyze and Interpret the Financial Statements

Financial Analysis

Requires


Ratio analysis
Ratio Analysis Failure

  • Liquidity

  • Solvency

  • Profitability

  • Financial Efficiency

  • Repayment Capacity


Financial analysis2

Objectives Failure

Measure Financial Condition

Financial Analysis


Financial analysis3

Objectives Failure

Measure Financial Condition

Measure Financial Performance

Financial Analysis


Financial analysis4
Financial Analysis Failure

  • All business owners should have a basic set of financial statements at their disposal and they should know how to analyze and interpret them.


Profitable management of the extensive enterprise
Profitable Management of the “Extensive” Enterprise Failure

  • Forage-based cow/calf production has long represented a management paradox. Very high investment requirements per dollar of output provides a strong incentive to increase output per head (thereby reducing investment per dollar of output). Unfortunately, this ever-so-tempting objective has been regularly frustrated by the low economic responsiveness to performance enhancing technology. In short, it simple has not paid to manage beef cows or perennial grass with the same “intensity” as we do with more intensive enterprises like dairy cows, hogs, and row crops.


Profitable management of the extensive enterprise1
Profitable Management of the “Extensive” Enterprise Failure

  • In extensive enterprises (such as the commercial cow/calf business), we seldom find it profitable to maximize yield per acre or performance per animal. Rather than “pouring on the technology”, we must recognize the nature of the brute, live harmoniously with nature, and make a very discriminating use of yield or performance-enhancing technology. In brief---we generally have to finesse a profit.


Profitable management of the extensive enterprise2
Profitable Management of the “Extensive” Enterprise Failure

  • Output maximization may approximate optimal management for intensive enterprises. However, optimal management of the extensive enterprise comes closer to input minimization.

V.E. Jacobs, 1984


A paradox
A Paradox Failure

  • Farmers believe they benefit from agricultural technology…but they don’t

  • Consumers don’t believe they benefit…but they do


Technology is
Technology is…. Failure

  • Productivity enhancing

  • Management intensive

  • Capital intensive

  • Not scale neutral


The end
The End Failure


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