Financial Management of Agribusiness Firms
AGEC 446
Fall 1998
Instructor: Dr. Godfrey C. Ejimakor
Office: 154-B Carver Hall; Phone (336)334-7943.
Office Hours: 9 - 10am; 3 - 5pm, MWF or by appointment
Meeting Time: 10:00 - 10:50 am MWF
Meeting Place: 168 Carver Hall
Required Text: Lee, Warren F., Michael D. Boehlje, Aaron G. Nelson and William G. Murray, Agricultural Finance, 8th Edition, Iowa State University, Ames 1988.
Course Objective: The general objective of the course is to foster an indepth understanding of the application of financial management principles in the operation of an agribusiness firm. This includes the impact of risk and time on business decisions, the use financial statements, capital budgeting and risk management techniques. The regulatory framework and the financial institutions serving the farm and agribusiness sector will be discussed.
Grading: Grades will be determined as follows:
Class Participation/Attendance 10%
Two Midterm Exams. 40%
Homework Assignments 20%
Final 30%Total 100%
I. Introduction
Study of Agricultural Finance, Farm Sector Balance Sheet, Income, Cash Flows, Return on Equity and Farm Structure.
II. Principles of Agricultural Finance
The Impact of Risk and Time on Financial Decisions, Business versus Financial Risk, Enterprise Portfolios, Portfolio Theory and Diversification, Principle of Increasing Risk, Leverage and Firm Growth, Time value of Money, Compounding and Discounting, Capital Budgeting Criteria and Investment Analysis.
III. Financial Management of Agribusiness Firms
Types of Business Organizations, Resource Control in the Agribusiness Firm, Leasing, Contracting, Credit, Use of Credit, Financial Analysis, Credit Analysis, Risk Management and Insurance.
IV. Financial Markets and Agricultural Credit Institutions
Financial Institutions and the Economic/Regulatory Environment, Lending Institutions that Serve Agriculture, Acquisition and Allocation of Funds in Agribusiness Credit Institutions, The Farm Credit System.