Question
Place your answers in the table provided at the end of the question
A farmer expects to have three activities on her property over the coming year with the following total gross margins (TGMs):
Yearling - expected TGM $55,500
Merino ewes- expected TGM $ 23,000
Barley - expected TGM $ 17,000
She also expects to obtain $4,200 for helping a neighbour with shed hand duties during shearing and $2,000 for part-time work at a restaurant on Fridays and Saturdays.
Expenses for the year are expected to be as follows:
Administration $2,500
Permanent labour $20,000
Fuel and oil $3,000
Repairs and maintenance on machinery and structure $2,200
Rates $1,000
Interest $12,000
The value of her labour $35,000
Opening and closing values for assets and liabilities are:
Assets opening closing
Land and improvement $400,000 $450,000
Livestock $80,000 $80,000
Plant and machinery $40,000 $36,000
Other assets $4,000 $4,000
Liabilities
Long term loan $200,000 $180,000
Other liabilities $25,000 $0
Using the information above, calculate the following measures of farm performance and state what they mean (i.e. meaning: return to management for their own and the bank's capital investment):
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Measure
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Value
($) or (%)
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Meaning
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Net farm income
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Operating return
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Business return
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Equity ratio
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Return total assets
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Return on equity
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