|
NW MN | A typical standard for crop farms would be a minimum of 15% working capital relative to gross income, with 25% a more comfortable measure to shoot for. The higher that WC / AGI % gets the less dependent you are on other sources for putting in a crop and the more freedom you have to make capital purchases as needed. From a lending standpoint the working capital you put into your crop is your skin in the game and the higher the ratio is a part of what that makes lenders more comfortable in providing their funds for a line of credit. Most farmers keep some available cash around to make cash flow work better as working capital can be tied up in crop inventories, and other things that aren't actually cash. | |
|