Financial Management for Agribusiness

Contents......Page 8
Foreword......Page 6
Acknowledgements......Page 16
The agribusiness sector......Page 18
How do these factors impact on management?......Page 19
Business planning......Page 20
Plan of this book......Page 21
2 Data collection and recording......Page 24
Collecting data......Page 25
Summarising physical data......Page 26
Paddock record......Page 30
Specialised physical records......Page 32
Individual livestock records......Page 34
Employee records......Page 36
Market and quality assurance programs......Page 39
The office and the office system......Page 41
The office system......Page 42
Dealing with financial transactions......Page 44
Information and decision support systems......Page 47
Information and marketing services......Page 48
Other computer applications......Page 49
Appendix 1 Internet resources......Page 50
Assets, liabilities and owner’s equity......Page 52
Income and expenditure......Page 53
Meeting tax obligations......Page 55
Setting up a cash record......Page 56
The cash record format......Page 57
Recording transactions......Page 59
Bank transactions......Page 67
Off-farm investments......Page 69
Totalling and checking the cash records......Page 70
Bank reconciliation......Page 71
Personnel records......Page 73
Superannuation......Page 74
End-of-year summaries......Page 75
Creditors (amounts owed by the business)......Page 79
Plant and machinery......Page 80
Spreadsheet software......Page 82
Summary......Page 84
Appendix 1 Dairying cashbook categories......Page 86
Appendix 2 Grazing/cropping cashbook categories......Page 87
Appendix 3 Horticulture cashbook categories......Page 89
Appendix 4 Categories from a horse stud......Page 90
Appendix 5 Categories for computer software packages......Page 92
Cash flow statement......Page 94
Monitoring cash flow performance......Page 95
Budget analysis......Page 96
Cash flow budget......Page 99
Preparation of the cash flow budget......Page 103
Budget revision......Page 108
Summary......Page 111
Appendix 1 Internet resources......Page 112
5 Assessment of business equity......Page 114
Statement of assets and liabilities......Page 115
Valuation of land and fixed improvements......Page 116
Calculation of owner’s equity......Page 117
Provision for taxation......Page 118
Owner’s equity and net worth......Page 119
The purpose of the statement of assets and liabilities......Page 120
Summary......Page 126
Income and expenditure......Page 128
Return to equity......Page 129
The concept of net income......Page 130
Income categories......Page 132
Expenditure categories......Page 139
Statement of income and expenditure......Page 146
Assessing profitability......Page 148
Operating profit before tax......Page 150
Operating return and return to assets......Page 151
Change in equity......Page 152
Summary......Page 155
Introduction......Page 158
The Australian tax system......Page 159
Income tax and management decisions......Page 160
Taxation of primary producers......Page 161
Assessable income......Page 163
What is statutory income?......Page 166
Capital gains......Page 170
When are capital gains assessable?......Page 173
Other statutory income......Page 175
General deductions......Page 177
Specific deductions......Page 178
Calculation and collection of income tax......Page 185
Tax rate averaging......Page 186
Tax offsets (rebates)......Page 188
Taxpayer’s obligations and rights......Page 189
GST liability......Page 192
GST records and returns......Page 194
Fringe benefits tax (FBT)......Page 195
Taxation of fringe benefits......Page 196
Cash flow and taxation timing......Page 197
Income splitting......Page 200
Summary......Page 204
Appendix 2 CGT......Page 206
Appendix 3 Income tax......Page 207
8 Succession and estate planning......Page 212
Alternative business structures......Page 213
Partnership......Page 214
Private company......Page 219
Trust......Page 222
Comparing alternative business structures......Page 228
Handing over the reins......Page 229
Wills and power of attorney......Page 230
Choosing an executor......Page 231
Power of attorney......Page 232
Appendix 2 Setting family and business goals......Page 233
Is the business successful?......Page 236
Management analysis procedure......Page 237
Rival Downs case study......Page 238
Asset valuation......Page 243
Return to total assets......Page 245
Operating expenditure to income ratio......Page 246
Owner’s equity......Page 247
Enterprise performance......Page 248
Gross margin analysis......Page 249
Evaluating enterprise performance......Page 250
Case study gross margin analysis......Page 251
Deficiencies in gross margin analysis......Page 254
Cost of production analysis......Page 255
Risk management......Page 257
Conclusion......Page 258
Appendix 2 Dry sheep equivalent......Page 259
Appendix 3 Benchmarks......Page 260
Appendix 4 Horticulture case study......Page 261
Appendix 5 Equine case study......Page 268
Appendix 6 Grain target pricing......Page 275
10 Business and marketing planning......Page 280
Personal and business objectives......Page 281
Market information......Page 282
Assessing the marketing environment......Page 283
Distribution systems......Page 285
Information on customers......Page 286
Market segmentation......Page 287
The marketing mix (the 4 Ps)......Page 288
Place (distribution)......Page 289
Price......Page 290
Marketing mix decisions......Page 291
The business planning process......Page 292
Step 1 Current position......Page 293
Step 2 Set goals......Page 296
Step 3 Strategic options......Page 297
Step 4 Strategy selection and documentation......Page 298
Appendix 2 Market planning checklist......Page 300
Appendix 3 Business plan format......Page 302
Partial budgeting......Page 304
Change in management practices......Page 305
Changes involving capital expenditure......Page 307
Assessment of profitability......Page 310
The effects of income tax......Page 317
Feasibility......Page 319
Allowing for risk and uncertainty......Page 320
Planning and budgeting techniques......Page 321
Marketing strategies......Page 322
Enterprise selection......Page 323
Conclusion......Page 324
Effective rate of interest......Page 326
Types of interest......Page 329
Types of loan......Page 330
Borrowing decisions......Page 335
Debt reconstruction......Page 344
Conclusion......Page 349
Appendix 1 Internet resources......Page 351
Writing the plan......Page 352
Plan implementation......Page 354
The life of a business plan......Page 355
Summary......Page 356
Glossary......Page 357
Index......Page 361