Let The Numbers Do The Talking
Dick Wittman, who lectured about financial management at the Executive Program for Agricultural Producers, was able to obtain financial information on this year’s participants. Approximately 30 businesses filled out the survey, which provided some interesting results.
The median gross revenue was $1.4 million, while median owned assets totaled $3.6 million and median liabilities of slightly over a million dollars were listed. The median operating profit margin was 16.7 percent, while the maximum reported was 33 percent.
The median asset turnover ratio (revenue divided into assets) was 36 percent, but the average was 57 percent. This means that these businesses were turning their capital in under two years. This is indicative of high performing businesses that are employing an asset “lite” strategy of getting the most out of their capital and human assets.
These producers were carrying a median debt to asset ratio of 40 percent, very similar to those numbers observed on commercial agricultural producers’ operations. By the way, the average debt to asset ratio for agricultural operations is 16 percent in the U.S., which includes both large and small farms.
Where they profitable? The median return on assets (ROA) was 10 percent, with the average being 13 percent.
From a time management standpoint, these executive producers were working about 2,980 hours per year. The average worker in America spends 2,050 per year on the job. These peak performers are hard workers, but it appears to be paying off!
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Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.
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