Farm Financial Management Toolkit

In order to make important, timely decisions for your farm business, you need to know what is in front of you.

Knowing how to calculate specific measures to analyse performance and identify room for improvement is key. We have developed a range of videos explaining how to use the below tools to improve your business.

Understanding Economies of Scale Tool

The aim of this tool is to look at the extent to which you achieve economies of scale or diseconomies of scale. When you are looking to expand or expand your business the aim is to look at a business that's got an existing cost structure. Then, look at a partial budget approach to work out the extent by which the business achieves economies of scale by expanding through either purchasing or leasing more land, or a diseconomy of scale and to not expand.

Templates to Download

Downloadable Economies of Scale Tool

Understanding Cost Allocation Tool

The aim of this tool is to take all the costs of the business and to allocate them to different components within the business. This tool will allow you to allocate components to below the line of your operating business and above the line of your operating business.

Templates to Download

Downloadable cost allocation tool template

Understanding labour efficiency

Labour efficiency is a measure of the efficiency with which labour resources are employed within a farm business. Labour efficiency is assessed as a ratio of productive livestock or crop units per full time equivalent (FTE) labour unit (LU).

Understanding a livestock trading schedule

The livestock trading schedule assists in management control as it tracks livestock inventory at key points in the year. A livestock trading schedule is used to calculate the enterprise gross profit, which is an important component of the income statement in management accounting.

Understanding whole farm feed supply

Whole farm feed supply refers to the amount of feed available to livestock during a pre-determined period.  It is an important  concept in livestock businesses as the number  of livestock managed  in a given area (stocking rate) is dependent on it.

Understanding whole farm stocking rate

Whole farm stocking rate refers to the total number of livestock managed over the farm area. Stocking rate is an important concept in livestock businesses because farm financial assessment and analysis shows that feed utilisation is an important driver of profitability in livestock businesses.

Understanding a partial budget

A partial budget is used to analyze the financial impact of a specific change you are considering making in your farming or fishing business, such as substituting enterprises, changing input levels or types of inputs, changing the size of enterprises within your business, and buying more machinery, infrastructure or land. It compares the positive and negative effects of the proposed change on net income to help you make an informed decision, but keep in mind that it doesn’t analyse whether the specific change you’re considering is the best one you can make for your overall operation.

Templates to Download

Understanding a reverse budget

A reverse budget is used to identify your future financial needs (both personal and business) and establish whether your business is generating enough income to meet your future financial requirements. If your business can’t meet your future financial needs, the reverse budget will also help you figure out whether there is existing earning capacity within your business to meet those needs or alternatively, whether you need to make changes to your needs, either in terms of the amount funds needed or the timeframe in which they’re required.

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Understanding farm depreciation

Depreciation is the process of allocating the cost of certain types of assets to each production period during which those assets are used. Plant and equipment are depreciable assets and include items that are easily removable or mechanical in nature. This calculator allows you to allocate the cost of your plant and equipment over the course of single year. The information generated by this tool can be used to provide an accurate statement of the cost of plant and equipment ownership. It is not suitable for taxation purposes as the rates of depreciation used are estimated market values, not tax values of depreciation.

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Understanding the whole farm KPI calculator

The whole farm key performance indicator (KPI) calculator uses key financial data to give you an overview of how well your business is performing. The benefit of analysing your business in this way is to identify areas of success and areas of improvement to help you make fact-based decisions.

Templates to Download