This article examines the trends in annual working capital for Illinois grain farms, using data from the Illinois Farm Business Farm Management (FBFM) and building upon our recent analyses on farm liquidity (see farmdoc daily, October 31, 2024, December 4, 2023). Liquidity describes a farm business’s ability to generate sufficient cash or to quickly convert assets into cash to meet its financial obligations as they come due, which include unfinanced capital purchases, operational expenses, debt payments, family living expenses, and taxes. While there are several liquidity measures, our focus here is on working capital. This metric is defined as the difference between current assets (i.e., cash and assets expected to be converted into cash within the next 12 months, including accounts receivable, inventory, and prepaid expenses) and current liabilities (i.e., obligations due within the next 12 months, such as accounts payable, short-term loans, and upcoming taxes). In our analysis, we report the annual median current assets and current liabilities of grain farms in Illinois. We then use these values to calculate the implied value of working capital in that year, along with the median reported working capital. This approach will allow us to discuss the relative changes in median current assets and liabilities driving the working capital trends.
