Read the production cycle as a cash cycle
Cash leaves before production is sold. Seed, feed, fertilizer, fuel, labour and rent can cluster months ahead of revenue. A yearly income statement can look healthy while the monthly cash position is strained.
Map the timing of the largest outflows and inflows. Then add a downside case for delayed sales, lower yields, weaker prices or a repair that cannot wait.
Two simple measures, used carefully
Working capital is current assets minus current liabilities. The current ratio divides current assets by current liabilities. Both are snapshots, and both depend on the quality of the underlying values.
Inventory that cannot be sold quickly, receivables that may be delayed and a line of credit already near its limit should not be treated as perfectly liquid. The point is not to chase one ideal ratio; it is to understand what could become cash, when, and at what discount.
Protect optionality
Using all available cash for a capital purchase can make a farm more vulnerable even when it reduces debt. Financing part of a long-lived asset may preserve cash for operations, but only if the resulting payments fit realistic cash flow. Run both structures before deciding.