Despite the 1988 drought, the overall financial conditions of farmers and ranchers remained similar to those in 1987. On average, net farm income (profitability) and net cash farm income rose slightly, but fewer farms had positive incomes. More farms had no outstanding liabilities, and fewer farms had debt/asset ratios (solvency) above 0.40. This report provides a detailed analysis of farm financial performance based on the latest information from the Farm Costs and Returns Survey (FCRS).