Thursday, June 18, 2009

Balance Sheet / Beer

Class started with In the News, beginning with a classmate who never speaks, was totally unprepared, and makes one wonder why she bothers. The New York Times had an interesting article on how the recession is making stupid people with too much money "down-scale" their weddings, though they're still spending a whole hell of a lot, just on burgers n' shit instead of canapes and caviar. Another good article on the Shinn Estate of the Northfork -- only 8 years old and producing good quality wine, the fact of which runs counter to Richard's outline of setting up a new vineyard (which seems near to impossible to get a good wine out of a vineyard within 8 years).

So two gals dined and dashed from an IHOP, then promptly crashed their car into said restaurant. The father of one of the girls were befuddled, due to the fact she had $200 in her pocket...

Next up, we were given some numbers and we constructed a balance sheet, slotting items into current or fixed assets, short or long term liabilities, then figuring out the owner equity, no biggie. I can see the appeal of being an accountant -- figures are both reassuring facts, but at the same time by the way you arrange and make them interact, you can make them tell very different stories. And by the same measure, figures that seem to say very little can say a whole heck of a lot with a little bit of poking and prodding. What I'm learning: I'm definitely going to have to hire an accountant when I have my own biz.

Back into alcohol today's topic was liquid bread, a.k.a. beer. We reviewed the steps of brewing beer, then watched a film clip f a show I actually watch at home - the "Making Beer" episode of Modern Marvels. Malt is barley soaked in water to slightly sprout it, before roasting. Only in the U.S. are "adjuncts" allowed in addition to malt: corn, rice and cheaper grains that give a lighter product....and a different taste. In Europe, add these grains and you can't call it beer legally.

Funny, sake is called rice wine here in the U.S.....for tax reasons related to it's alcohol content. In truth, it is technically rice beer, as it is brewed, but without malt, with rice taking on the starring role.

Wednesday, June 17, 2009

The Balance Sheet / Wine History

Back to school! Everyone was very sweet and curious about Ediebird, and I get the impression I didn't miss too much. The rest of the class gave menu presentations (I do regret missing Zach's "Cheesequake" concept...), Marc Murphy gave a lecture, and Richard went into details of a financial statement.

Today we looked at the basics of the balance sheet. A profit & loss statement is a summary of the past. A budget is a prediction of the future. A balance sheet is a snap shot of where a business is at at a singular moment in time. Typically done at the end of the fiscal year, the balance sheet has two main categories: Assets and Liabilities. Assets can be current (cash or easily turned into cash) and fixed (things that typically last longer than a year, like equipment and furniture.) Liabilities are either short term (need to be paid soon, like pay roll, rent, inventory invoices) and long term (loans and mortgages)

A third category is owner equity -- what the biz owns outright. Assets = Liability + Owner Equity. The total value of a business, everything that it is, is adding up everything that is owned by the business and everything that is owned by the bank or lenders.

Richard, whose passion is wine, got into the nitty gritty of wine history, much of which I had already heard when I took a 7-class wine course with him last year. The first wine is thought to have been made in what is now Georgia (in Eastern Europe). The grape varieties of Europe have always made better wine than American grapes, but a mite in the American soil killed off most European grapes in the 1850s, only saved by grafting old world vines to new world root stock. The U.S. had it's own natural disaster with Prohibition, with many old, mature vineyards being torn up for other crops. Richard ran through all the steps and choices it takes to start a vineyard -- not a simple or cheap task. It could easily be 10 years before the first bottle of wine can be brought to market from a new vineyard. That's a pretty steep entry cost!

We watched a film from the 1980s about the origins of wine. They showed an old Georgian farmer who still makes wine like they did 1000s of years ago. Pluck grapes, step on them, put them in clay cisterns, put them in the cold ground with a cover and let 'em ferment. After a month or so, take out and drink, that's it. Looked dirty-funky, but probably fun.