CenterPoint^® Accounting for Agriculture - Using Ratios

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The Ratio module allows owners and managers the ability to track the overall financial condition of their operations over a period of time. The trend analysis within the Ratio module provides you with a tool to help manage and improve your business. The powerful drill-down capabilities allow you to see the data behind the indicators and trend information can be graphed for any number of years in your database. The graphs can be viewed in various formats such as charts, tables and also 3-D graphics.

There is no additional setup required within CenterPoint to utilize the CenterPoint Ratios module; the data is pulled from account categories already assigned to accounts in the software. A wide variety of industry standard ratios are included to calculate the financial analysis patterns and the comparisons of benchmarks in a business.

Prerequisite: You must have the Ratio module purchased and registered in the module configuration manager (File > Administration > Module Configuration Manager) prior to preparing Ratios.

Prepare a Ratio

Select Reporting Tools > Ratios.
The Ratio Options will be displayed automatically if this is the first time into Ratios. If it's not displayed, select the Options icon to display it. Select the Company and Date Range (From/To) of data to include in this ratio. Select the Frequency you want to include in the X axis of the ratio/index, options are Monthly, Quarterly, or Annually. The date and frequency information will be used as the X-Axis within the ratio.

If you will be using Farm Financial Standards Council ratios, select the Farm Financial Standards Council tab. Specify if you'd like the ratio to use Book Values or Market Values when calculating Balance Sheet Data. Balance Sheet Data is on assets, inventories,, liabilities, and owner's equity. Also specify if the ratio should use Cash or Accrual for the Transaction Data. Transaction data is activity on the income, expenses, and cost of good sold accounts. If you will be using Ferguson System Indicators instead of Farm Financial Stanards Council ratios, this step can be skipped.
Click OK.
From the row of icons at the top , select the type of chart the ratio information should be displayed in. The drop down box next to each icon lists the variety of line, pie, bar and area charts available to choose from. Note: If you select a 3D bar chart, you can rotate the view by selecting the chart and while left-clicking move your mouse horizontally or vertically.

On the top left, select what rules to use for this analysis; Ferguson System Indicators or Farm Financial Standards Council.
Select the ratio to display. A list of available ratios is displayed on the left. Each ratio is comprised of components and account categories. The components of each ratio can be displayed by clicking the plus sign to the left of the ratio or by double-clicking on the ratio. If you click the plus sign to the left of the component or double-click on the component, a list of the account categories in the component displays. Selecting a ratio will automatically include all components and categories within that ratio. Otherwise you can pick and choose which components and categories to include by clicking on the plus sign, but choosing parts instead of the entire ratio will change the results of the ratio. To include only certain components or categories, select the first account category/component and then hold the CTRL key while you select the other account categories/components you wish to view. Once selected, the category/component icon will be highlighted in green.
In the example below:

Recommended Financial Ratios, Alternative Financial Ratios, and Other Performance Measures are ratio grouplevel nodes.

Liquidity, Solvency, Profitability, etc. are measurement types for ratios.

Current Ratio is the Ratio, Current Assets at Book Value and Current Liability at Book are both Components of the ratio

Seed/Plants WIP WIP, Fuel WIP, etc. are Account Categories. It is very important that all accounts be assigned the correct account category (Setup > Accounts > Accounts) when using ratios.

The measurements available in the Farm Financial Standards Council Ratios are part of five categoreies:

Liquidity - measures the ability to meet financial obligations as they come due in the ordinary course of business, without disrupting the normal operations of the business.

Solvency - measures the amount of borrowed capital (or debt), leasing commitments and other unpaid expense obligations used by a producer in relation to the amount of owner equity invested in the business. Debt capital is interest-bearing and/or has a date which debt must be paid. Therefore, solvency measures provide (a) an indication of the producer's ability to repay all financial obligations if all assets were sold (for the prices indicated), and (b) an indication of the ability to continue operations as a viable business upon experiencing various financial adversities (e.g., drought, market collapse, expense overrun) which typically results in increased debt or reduced equity.

Profitability - measures the extent to which a producer generates a profit from the use of land, labor, management and capital.

Repayment and Replacement Capacity - measures the ability of a borrower to repay term debt and interest, as well as replace capital from farm and non-farm income. Principal payments on term or non-current debt come from net income (with depreciation added back) after owner withdrawals, income taxes, and Social Security taxes.

Financial Efficiency - measures the intensity with which a producer uses the assets to generate gross revenues and the effectiveness of productions, purchasing, pricing, financing and market decisions.

Each ratio and index has an accompanying explanation to help you interpret the information. The explanations can be viewed by clicking the Formula/Description button at the bottom of the Ratio screen. For your convenience, we've also created a topic that provides a list of the ratios included, and their descriptions and formulas. Please refer to the Ratios: Formulas and Descriptions document

Ratios, Components and Categories that have zero values can quickly be hidden from the ratios list by right-clicking and choosing the appropriate option.

If you'd like to switch the default order of the X Axis (defaults to chronological) with the most distant year being closest to the left (Y Axis), click the Reverse X Axis button in the toolbar. Click the Reverse X Axis icon again to revert back to Chronological.
To print the ratio, select the printer icon . This will print both the chart and the table included in this ratio. To print just the Chart or the Table, click on the drop down box next to the printer and choose the appropriate selection.
The ratio can also be exported as a PDF, an Excel spreadsheet, an HTML item or as an image. To export the ratio, click on the ratio button in the toolbar and make the appropriate selection.

Open a Ratio:

Select Reporting Tools > Ratios, and then click .
Select the company or companies you want to include in the ratio/index.
Select the date range you want to include in the ratio/index.
Select the frequency you want to include in the X axis of the ratio/index, options are Monthly, Quarterly, or Annually.
Click OK.
Click the Farm Financial Standards Council or tab.
Select the way you want to calculate your Balance Sheet Data, options are Book Value or Market Value. Balance Sheet Data is on assets, inventories,, liabilities, and owner's equity.
Select the way you want to calculate your Transaction Data, options are Cash or Accrual. Transaction data is activity on the income, expenses, and cost of good sold accounts.
From the drop-down on the left side of the screen, select either Ferguson System Indicators or Farm Financial Standards Council.
Click OK.

Print a Ratio:

Select Reporting Tools menu > Ratios.
Set Ratio Options and Format.
Open a ratio.
Click the drop-down arrow on the Print Icon .
Select Chart to print the graphical image of the ratio or select Table to print a display that is similar to a spreadsheet.
Click the Print icon . The information will be printed on the Windows default printer.

Export Ratio Information:

Select Reporting Tools > Ratios.
Set Ratio Options and Format.
Open a ratio.
Click the Export icon .
Select to export the ratio information to a PDF, HTML, Excel, or Image file.
Select the location you want to save the export file to.
Enter a filename for your export file.
Click Save.

View Ratio Components/Categories:

Select the Reporting Tools > Ratios.
Set Ratio Options and Format.
Open a ratio.
Set the type of chart you want to display, Line, Pie, Bar, or Area.
To view all components that make up a ratio, right-click on the ratio name and select Select Components. All of the components will display in the format you previously selected on the right side of the Ratio screen.
To view only a selected set of components that makeup a ratio, click the plus sign next to the ratio name, then select the component(s) you want to view. To select multiple components, hold the CTRL key while you make your selections. Only the selected components will display in the format you previously selected on the right side of the Ratio screen.
To view all of the account categories that make up a component for a ratio, perform Steps 1 -3 and Step 4 or 5, and then right-click on a component and select Select Categories. All of the account categories that makeup the component will display in the format you previously selected on the right side of the Ratio screen.