7 Class Hours

Instructor: Tim Ohlde

Tariffs, global health issues, politics, weather…the list of disruptions continues. What does it take to navigate today’s uncertainties and the ones yet to be seen? This class will convey three of the “must haves” for successful ag lending in today’s economy; to not only survive but to thrive.

Ratio analysis is a must for effectively analyzing a farmer’s operation. Learn about three tremendous ratios and how to “listen” to what the analysis is saying. These ratios are a great addition (or refresher) if you are increasing ratio analysis in your lending arsenal. For those already using ratio analysis, the course will provide a deeper dive as well as a fresh perspective. Attendees will learn how to calculate these ratios and how these ratios can be used to become a more effective lender. Communicating these essential ratios effectively to your borrowers helps build value with customers in today’s competitive environment.

Accrual adjusted analysis mitigates the difficulty of ratio analysis with Schedule F tax returns. Due to inaccuracies inherent in cash accounting and the desire to minimize tax obligations, you’ll learn firsthand why a Schedule F is not a substitute for an income statement. You’ll study the best alternative, accrual adjusted analysis; an efficient approach to true net profit analysis that takes less time than analyzing a cash tax return.

Proper loan structuring is key to borrower and portfolio success. Loan structuring dos and don’ts will be shared, and key structuring tools will be discussed. Tools include terms, financing methods/types, repayment, collateral, covenants and monitoring. Attendees will learn how to evaluate loan structure effectiveness and feasibility, specific techniques for stressed credits, how loan structure impacts an operation’s performance, techniques for monitoring implementation, how portfolio performance is impacted by loan structure, and specific mistakes to avoid in the structuring process.

Learning Objectives:

  • The definition and purpose of the working capital ratio, the components necessary to correctly calculate the ratio, (including a properly slotted and timed balance sheet), tips on improving/correcting the ratio, and how to properly communicate about the ratio internally and externally.
  • The definition and purpose of the Operating Expense Ratio – the best overall benchmark for efficiency in agriculture; the components key to correct calculation (including a properly slotted income statement); tips on improving/correcting the ratio, and how to properly communicate about the ratio internally and externally.
  • The components of calculating the Term Debt Lease Coverage Ratio for Agriculture, how to correctly interpret the ratio, how to correctly communicate the ratio to the borrower and loan committee, four approaches to calculating debt service, and using the Financial Performance Diagnostic Matrix to improve borrower’s repayment ability.  Accrual adjusted analysis will be highlighted with this ratio with a comparison of cash analysis versus accrual adjusted analysis on this ratio.
  • The fundamental underpinnings of loan structuring and how this plays an integral role in individual loan and portfolio success.


Annual School Session

Second/Third Year, Second Week Elective Course

Lending Track