Business And Finance In Agriculture Flashcards
(20 cards)
What is the purpose of a business plan in agriculture?
To outline goals, strategies, financial forecasts, and operational plans to guide the farm business.
Name two examples of fixed costs on a farm.
Rent and machinery depreciation.
What is meant by “variable costs” in crop production?
Costs that change depending on output, like seeds, fertilizers, and pesticides.
What is gross margin in crop production?
GrossProfit=Revenue−CostofGoodsSold(COGS)
Why is cash flow important for a farming business?
To ensure the business can meet its financial obligations as they arise.
What does ROI stand for, and why is it important?
Return on Investment – measures profitability relative to investment costs.
What is diversification in a farm business context?
Expanding into new areas (e.g., tourism, value-added products) to reduce risk and increase income.
What financial document shows income and expenses over a period?
Income statement (or profit and loss statement).
What is the break-even point in crop production?
When total income equals total costs (no profit or loss).
What is meant by “capital investment” on a farm?
Money spent on long-term assets like tractors, irrigation systems, or greenhouses.
Name one internal and one external source of finance for a farm.
Internal: Retained profits. External: Bank loan.
What is a subsidy in agriculture?
A government financial aid to support farm income and production.
What is meant by economies of scale?
Cost advantages gained by increasing the scale of production.
Why is budgeting important in farm business management?
To plan, monitor, and control financial performance.
What is the purpose of a balance sheet?
To show the financial position of a business at a specific time (assets, liabilities, equity).
What does the term “liquidity” refer to in a farm business?
The ability to pay short-term debts.
How can crop insurance help manage financial risk?
It protects income from crop failure due to weather, pests, or disease.
What is a financial forecast?
A prediction of future revenues and expenses to guide decision-making.
What does net profit represent in a farm business?
Total income minus total costs (both fixed and variable).
What is benchmarking in farm business analysis?
Comparing performance against industry standards or other farms to improve efficiency.
