Farm debt and coverage calculator

Whether the farm is over-indebted and whether its debt fits what it earns.

Three FFSC-standard ratios, each with its strong, stable or weak band.

Currency

Fill in at least one pair below. Each pair lights up one ratio.

Solvency (how much you owe)

Total assetsEverything the farm owns, at today’s value: land, machinery, livestock, stocks, cash on hand and receivables.

Total debtEverything the farm owes: loans, operating costs due, open accounts, machinery and land payments.

Coverage (what the operation earns)

Cash generated for debt, per yearWhat the operation leaves in the year to pay financing: the year’s profit plus depreciation, less what the family draws to live on.

Term-debt payments, per yearWhat you pay per year on term financing, principal plus interest on the installments (not the short-term operating credit).

Liquidity (the short term)

Current assetsWhat turns into cash within a year: cash, the crop in store to sell, receivables, inputs on hand.

Current liabilitiesWhat comes due within a year: this year’s installments, operating credit, accounts payable.

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Your diagnosis

Enter at least one pair (assets and debt, cash and payments, or current) to see your result here.

Take the full report

The step-by-step calculation with your own numbers, what each ratio and its band mean, the scenarios of paying down debt and of a lean cash year, a short recap of the method and the sources, in a report designed to keep and print. Leave your email and download it now.

ArticleUnderstand the three numbers you just sawWhat each ratio answers, why leverage and cash flow can disagree, and what to do with each band. With a real example and sources.Read the full article

Debt and coverage report

Your inputs

Your diagnosis

Calculation trail

What these numbers say

They are three readings of the same debt. Debt-to-asset measures leverage: what share of what you own is committed. Coverage measures whether what the operation earns in the year pays the term installments. The current ratio measures the short-term cushion. They can disagree, which is why you read them together: a farm can be lightly leveraged and still tight on cash against this year’s payment.

Understand the method in full

The full article shows what each ratio answers, why leverage and cash flow can disagree, and what to do with each band.

Read the full article

How to read it

The bands are a diagnostic reference, not a verdict: renting the land carries a higher debt-to-asset because the land is not an asset of the operation, and a larger or newer farm borrows more. Coverage here is the short sum, profit plus depreciation less withdrawals; the published one has seven terms, and on the source’s own example farm the gap between them moves the result from 1.063 to 1.22, that is, from weak to stable. Write down which version you built. Read the three together and against your own record, not one alone nor against the neighbor’s farm.

The sources

Does your debt fit what the farm earns, and are you over-leveraged? Enter the assets, the debt and what the operation earns in a year, and see three FFSC-standard ratios at once, each with its band: strong, stable or weak.

The three answers can disagree on the same farm: one reads the balance sheet, one the year’s cash against the payments, and one the short term on its own. A farm can sit at 60 percent debt against its assets, a level the standard reads as weak, and still cover this year’s payments, or look sound on paper and miss one.

The three are the ratios the Farm Financial Standards Council defines and Mississippi State Extension bands as strong, stable or weak. The cut-offs are a signal, not a law: what counts as weak depends on the enterprise, the stage of the business and how much of the land is owned.