Measures for Evaluating the Financial Position of a Dairy Business

Abstract

During recent years many dairymen have experienced substantial increases in their net worth and cash receipts. Much of this increase in wealth has been brought about through appreciation of fixed assets, especially real estate and machinery inventories. Because of inflation, replacement of these assets will require more credit and, therefore, greater cash available for debt service. With today's competitive money market, a dairyman must be more of a businessman than ever before. He must understand his financial position in order to satisfy lenders who make decisions which affect the dairyman's credit position. Also he must understand his financial position so that he can improve upon his weaknesses or liabilities. Now, let us discuss the factors taken into consideration when a dairyman's financial position is analyzed.