In the Southeastern Association the average accrual net farm income in 1996 was $67,579 for the 61 farms included in this report. The decrease is due to lower inventory levels since the increase in gross cash income was higher than the increase in total cash farm expenses. Even though this is a decrease of 8% from the 1995 average, the 1996 net farm income is still one of the highest on record. Only in 1978, 1990, 1991, 1994 and 1995 was average nominal profit also greater than $50,000. When adjusted by the Consumer Price Index (to provide a constant dollar or buying power comparison), the average 1996 profit is exceeded only in 1990 and 1995. The 20% of these 61 farms with the highest net farm income had an average net farm income of $196,161 in 1996; the low 20%, -$6,094. This is an increase for the high group; a decrease for the low group. Average gross cash farm income in 1996 was $261,050 for all 61 farms-- an 8% increase from 1995. Four sources of sales made up 84% of total income in 1996: milk, hogs, corn and soybeans. Compared to 1995, corn sales increased by $4,722; soybean sales by $8,591; and milk by $14,252. Sales from beef finishing decreased by $4,815. Government payments (of all types) decreased from an average of $13,382 in 1995 to $6,412 in 1996. Government payments dropped to 2% of total income in 1996. Average total cash expenses were $211,486 in 1996--an increase of 6% from 1995. As a percentage of both cash expenses and depreciation, feed expenses were 19% in 1996, up from 16% in 1995. Seed, fertilizer, and crop chemicals were steady at 19% of the total. Interest expense was 7% of the total again. Both the rate of return on assets (ROA) and the rate of return to equity (ROE) were 8% in 1996--a decrease from 9% and 10%, respectively, in 1995. On a cost basis value, average total equity (of the sole proprietors) was $393,584 at the end of 1996--an increase of $41,794 during the year. After a decline during 1993, average equity has improved steadily since 1986. At the end of 1996, the average debt-asset ratio was down slightly from 1993. The report provides additional information on profitability, liquidity, and solvency as well as other whole-farm information and detailed information on crop and livestock enterprises. Also reported are whole-farm financial condition and performance by county, sales size class, and type of farm and corn and soybean returns by county.