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What do Football and Farm Financials have in Common?

Dr. David Kohl
Educational Opportunities: 
Home > Education & Events > December 2020 > What do Football and Farm Financials have in Common?

Hi, I'm Dr. Dave Kohl, Professor Emeritus, Agriculture Economics at Virginia Tech, Blacksburg, Virginia, and also Academic Hall of Famer.

Today's subject matter is your financial depth chart. It's football season, and in football season, oftentimes they focus on the defensive part of the football team. Let's draw parallels to your financial depth chart on your financial statements. It's real interesting.

Your cash flows and your profits in your business, oftentimes I call it the kingdom or your defensive line. And if that defensive line breaks down, or if your cash flow and your profits break down, your fallback position, of course, is the linebackers. And that is called working capital on the financial statements. And that working capital can be there to handle adversity, but it can also be there to capitalize on opportunity.

Of course, in football terms, one of the things that we find is the real backups are the safeties and the cornerbacks. And that's analogous to your equity -- your collateral -- on your balance sheets. So as you examine your financial statements, particularly the balance sheet, one of the things is I want you to think about football and think about the depth chart, your profits, your working capital, and of course your safeties and cornerbacks will be your equity and capital.

And then kind of rate them as a green light, a yellow light or red light. Well, there you go. One of the things is we're in prime time football season, but again, as you think about football, be thinking about your financial statements. I want to wish you the best and good luck in analyzing those financial statements.
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