Let Your Budget Be Your Guide

Abstract

Large investments and high expenses have made financial management critical to today's dairyman.

Analysis of a dairy budget can be a profitable exercise for any manager. A budget will provide a dairyman with a survey of sources of income and projected expenses. Comparing an operating budget with "typical" figures may highlight inconsistencies in either budgeted income or expenses. Expenses higher than average in a given category may indicate inefficient use of resources, which will decrease net cash income. In contrast, very low expenses may' indicate a false economy, hindering production by restricting expenses unnecessarily. Budgeting is also necessary for determining the amount of debt which can be supported by the business. This is especially critical with high rates of interest. (See Dairy Guideline)