Industry benchmarks

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The table below describes the key whole of business and beef industry benchmarks with questions answered, methodology and a guide to performance using publicly available references.

Business benchmarks

Question answered

Methodology

Guide to performance

Net profit before tax profit KPI

 Will the profits meet your drawing and provisioning requirements?

Earnings before interest, lease payments and tax

>$100,000 = strong1

Return on assets managed profit KPI

Is the station business meeting its operational efficiency targets?

Earnings before interest, lease payments and tax ÷ Total assets under management

>4% = strong2

Return on equity profit KPI

Is the station business meeting your wealth creation targets?

Earnings before tax ÷ Net assets under management

>4% = strong3

Interest cover solvency KPI

Is the station business generating enough profits to meet debt servicing obligations?

Earnings before interest, lease payments and tax ÷ Interest and lease payments

3 = strong

Peak debt

Will your finance arrangements cover your working capital requirements?

Lowest working account balance for the year

N/A

 Expense ratio risk KPI

Are you generating enough income to meet your ongoing expense needs?

Profit before interest and tax ÷ Gross income

>30% = strong2

1Farm Management 500 (2006). Business Health Indicators for Professional Farmers. 
2Holmes Sackett and Associates (2007). AgInsights
32006 – Knowing the Past: Shaping the Future. Holmes Sackett and Associates Pty Ltd