|
| I believe that is what GAAP accounting is for, to determine profits in a standard way. My borrowers will never provide me GAAP financials because that is overkill for vast majority of farms and very small businesses. I dont personally do it for my farm either. So we proxy by leaving appreciating assets like land at cost. I do back out stock market gains in earned NW calc too. Ultimately the bank is not there to psycho analyze vast majority of credits. If it is obviously good, we call pretty close good enough and move on. GAAP is not necessary.
The point is, less parse out operational profits and valuation changes. If land (or stock market) gets cut in half, maybe operations will still show resilient. Admittedly, if land gets cut in half, ag profits are almost guaranteed non-existant for most. | |
|
Agriculture operating credit lines
