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Numerator_and_Denominator by gegeshandong

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									                    Numerator                                            Denominator                         Example


                                                      p
    Item(n)         Unit(n)          Type(n)          e     Item(d)      Unit(d)          Type(d)       *   Number         Unit            Name                   Type(e)
                                                      r

                                                                                      Input-resource-                               Asset turnover
 Revenue-all           $         Output-financial      /     Asset          $                                   35     %                                   Financial efficiency
                                                                                         financial                                  ratio


   Assets-                        Input-primary-             Debt-                     Input-primary-
                       $                               /                    $                                   33     %            Current ratio          Risk-Liquidity
   current                           financial              current                       financial


                                                                                                                                                           Physical efficiency-
Conceptions         number        Output-interm        /    Mating       number        Input-activity           50     %            Conception rate
                                                                                                                                                           cow-fertility


Is conception rate ok considering BCS, AI technique, time since calving, etc ok?


Feed-used to                                                                                                                        Proportion of feed     Physical efficiency-
                     t DM          Input-interm        /    All feed       t DM         Input-interm            60     %
produce milk                                                                                                                        to milk                cow-feed

Are non-milk feed requirements too high, are cows being fed at a high enough level?


                                                                        1 yr labour                                    MS/labour                           Physical efficiency-
 Milk Solids          kg           Output- final       /    Labour                     Input-primary          1,000                 Milk per labour unit
                                                                            unit                                       unit                                labour

                                                             Milk                                                                                          Physical efficiency-
   Milk Fat           kg           Output- final       /                    kg          Output-final           0.85    kg/kg        Fat to protein ratio
                                                            Protein                                                                                        cow-diet
                                                             Milk                                                                                          Physical efficiency-
    Cells          number         Output-interm        /                    ml          Output-final         15,000    cells/ml     Cell count
                                                            Volume                                                                                         cow-health
Is cow mastitis ok considering the cost of treatment, control?

                                                                                                                                                           Physical efficiency-
Milk Volume          litres        Output- final       /         Cow     number        Input-resource         7,000    litres/cow   Litres per cow
                                                                                                                                                           cow
                                                                                                                                               Milk solids per        Physical efficiency-
 Milk Solids          kg             Output- final      /      Land            ha          Input-resource               1,000    MS/ha
                                                                                                                                               hectare                land
Grass                                                                                                                                          Pasture                Physical efficiency-
                     t DM            Output-interm      /      Land            ha          Input-resource                   10   t DM/ha
consumed                                                                                                                                       consumption            land
Is pasture consumption ok considering rainfall, irrigation, soil type, soil fertility, pasture composition, grazing management, method used to calculate it?
                                                                                                                                                                      Physical input level-
   Feed-all          t DM            Input-interm       /      Cow          number         Input-resource                    6   tonne DM      All feed per cow
                                                                                                                                                                      cow
  Fertiliser                                                                                                                                   Fertiliser             Physical input level-
                      kg             Input-primary      /      Land            ha          Input-resource                 400    kg/ha
  element                                                                                                                                      application rate       land-fert
  Fertiliser                                                                                                                                                          Physical input level-
                     parts           Input-primary      /      Soil           parts        Input-resource                   22   ppm           Olsen P
  element                                                                                                                                                             land-fert
Is P input at appropriate level?

   Grass                           Output-interm and                                                                                           Proportion of feed
                       t                                /    All feed           t            Input-interm                   60   %                                    Physical proportion
 consumed                            Input-interm                                                                                              from grass

Is the proportion of feed from grass ok considering the price of milk, price of grass, the price of purchased feed, and the relative volatility of these output and input prices?

    Cows            number           Input-primary      /      Land            ha          Input-resource                    4   cows/ha       Stocking rate          Physical proportion

                                                                                           Input-resource-
 Milk Volume         litres          Output- final      /     Asset             $                                                              Physical turnover      Physical proportion
                                                                                              financial

                                                              Milk
   Milk Fat           kg             Output- final      /                     litres         Output-final                  4.3   %             Fat test               Physical proportion
                                                             Volume
   Energy             MJ              Input-interm      /      Feed          kg DM           Input-interm               12.00    MJ/kgDM       Energy density         Physical quality
    Feed
                       $             Input-financial    /    Energy            MJ            Input-interm                 0.20   $             Energy price           Price
   payment
Is energy price ok, considering price of milk, feed level of cow?
    Feed
                       $             Input-financial    /      Feed           t DM           Input-interm                 250    $             Feed price             Price
   payment

   Interest                                                                                Input-resource-
                       $             Input-financial    /      Debt             $                                            8   $/$100        Interest rate          Price
   payment                                                                                    financial

                                                              Milk
Milk receipts          $            Output-financial    /                    kg          Output-final                     4.00   $             Milk price             Price
                                                             Solids
Is milk price ok, considering milk components, milk quality, season, milk company, farm size?
Milk receipts less
all feed payments         $      Margin-financial     /       Land           ha         Input-resource    4,000   $             MOAF/ha                Profitability
      (MOAF)

Is MOAF/ha ok considering health and quality of cow, level of risk, labour input, overheads?

                                                                                       Input-resource-
     EBIT             $          Margin-financial     /       Asset          $                              12    %             ROA                    Profitability
                                                                                          financial

Is ROA ok considering, EBIT% (risk), cost of money?

Milk receipts less
       conc               $      Margin-financial     /        Cow         number       Input-resource    1,100   $/cow         Margin over Concs      Profitability-partial
payments(MOC)

How efficient is feed other than concentrates, cow health?

     EBIT             $          Margin-financial     /      Revenue         $         Output-financial     35    %             EBIT %                 Risk

Is EBIT% ok considering, asset turnover, total revenue?

Expenses-all feed         $        Input-financial    /   MilkVolume         litres      Output-final      0.11   cents/litre   Feed costs per litre   Risk

Milk receipts less
all feed payments         $       Margin-financial    /      Milk Solids      kg         Output-final      3.00   $/kg MS       MOAF/kg MS             Risk
      (MOAF)
                                                                                                                                Cost of producing
  Expenses-all            $        Input-financial    /   MilkVolume         litres      Output-final      0.22   cents/litre                          Risk
                                                                                                                                a litre
       EBIT               $       Margin-financial    /   MilkVolume         litres      Output-final      0.03   cents/litre   Profit per litre       Risk

                                  Input-resource-                                      Input-resource-
      Equity              $                           /        Asset           $                            60    %             Equity %               Solvency
                                     financial                                            financial

   Cows culled        number       Output- final      /      100 cows      number       Input-resource      15    %             Cull rate

    Expenses              $        Input-financial    /

Expenses-to grow                                               Grass
                          $        Input-financial    /                      t DM       Output-interm      150    $/t DM        Cost of grass          Price
     grass                                                   consumed
Operating profit
                                                           The ratio of EBIT compared to revenue. Indicates profitability. (>25%) Use EBIT %????
margin (EBIT %)

Debt to equity ratio                                                  Level of liabilities compared to equity. Indicates solvency. (<100%)


                        The ratio of the value of goods produced against the value of the resources used in their production. Profitability is different from profit. Profit is an amount of
PROFITABILITY
                                                          money; profitability is that amount COMPARED to the resource used to produce that profit.


                        The ratio of total revenue to total asset. Indicates how efficiently assets are being used to generate income, or financial efficiency. (50%) When this ratio is
Asset turnover
                       multiplied by the operating profit margin the result is return on assets (ROA). For example, an operating profit margin or 25% and an asset turnover ratio of 50%
ratio(A)
                                                                                              will give a ROA of 12.5%.


Equity to assets
                                                             The proportion of the business that is borrowings free. Indicates solvency. (> 40-50%)
ratio



                         The ability to repay all borrowings when they are due, or if the business was sold. Indicates the borrowing capacity of the business and the financial risk the
SOLVENCY
                                                                          business is taking. Also referred to as gearing or leverage.



Return on assets          Profit, before interest expenses, (which is EBIT) compared to assets. This ratio can be used to compare the return on the business assets to alternative
(ROA)                                                                  investments or other businesses. Indicates profitability. (> 10%)



Debt to assets ratio                                                Level of liabilities compared to assets. Indicates solvency. (< 50 – 60%)


                        Extent to which equity has been multiplied by the use of debt. A highly levered (geared) business offers higher returns when it is performing well but will also
Leverage (T)
                                                         increase losses when it is performing poorly and therefore carries greater financial risk.

                        Profit, after interest expenses, compared to equity. Indicates profitability. (>15%) ROE can be calculated from the ROA, leverage(L) and the interest rate on
Return on equity
                        liabilities (IR): ROA plus (diff ROA to IR)X(1 minus L). If ROA is higher than the interest rate on liabilities, ROE will be higher than ROA, indicating there is a
(ROE)
                                                                                                  gain to leverage.


By Frank Tyndall
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