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The financial tools a farmer can use to analyze, plan, and control his business include financial statements, profit and loss statements, and cash-flow statements. A financial statement tells the amount of money invested in farm assets, outstanding debts, the owner’s equity in the business, and the degree to which the farm is liquid and solvent. Liquidity is the ability to meet financial obligations on time, whereas solvency is the ability to pay all debts if the business is forced to discontinue. A profit and loss statement shows sources and amounts of income and operating expenses. Comparison of profit and loss ...(100 of 4586 words)