Posted 1/31/2024 12:51 (#10602224 - in reply to #10602163) Subject: RE: ? For resident bankers re working capital
golfnut - 1/30/2024 22:57
As a former banker I'll suggest there is no magic number. Less leveraged operations can operate with a lower level of working capital compared to highly leveraged operations. That in itself presents an issue but these conversations have the ability to end up like a cat chasing its tail. I prefer to look at it on a $/acre basis. $200-$300/acre is probably a good starting point.
Good answer here. Even the $/acre is a “cat chasing its tail”. Different geographic areas, different risk, different leverage, different timing etc. No real magic ratio there other than the more liquidity you have=more near term flexibility you have. Just because farmer A has a current ratio of 3/1 & farmer B is at 2/1 doesn’t really mean one is in better or worse financial shape than the other. Lots more details to know.
? For resident bankers re working capital
