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BUSINESS HEALTH CHECK
The aim of the business health check is to provide you and stakeholders an overview of the current financial situation and SWOT analysis of your business to help identify areas of strength and weakness in your business.
It is designed to give a snapshot of the current business position from the last three years financials. This will help identify trends and areas of both strength and weakness in the business.
Key ratios and benchmarks provided include:
- LVR – Loan valuation ratio, a key ratio
banks use to determine your risk factor. - Return on Equity.
- Return on assets.
- Asset turnover ratio.
- Overhead cost ratio
- TPML – total plant and machinery.
- GM/ha.
- GM/dse.
- Yield kg grain/100mm rainfall.
- Revenue per labour unit.
- Depreciation per hectare
An understanding of these key ratios can help business owners and stake holders have more informed conversation around the following areas:
1
OVERALL FINANCIAL PERFORMANCE
What are the key factors driving your financial performance, are there areas of weakness that need to be improved upon, are there areas of strength that should be further capitalized?
2
RISK IN THE BUSINESS
What are the key risks to the business, are these risks healthy or harmful? Are the risks in the business helping it to achieve the overall goals of the business?
3
DEBT STRUCTURES
Analysis of current debt structures, are there other ways to structure debt that would benefit your business?
4
CAPACITY TO GROW
What is the capacity of the business to grow? Are there opportunities that could help the business to
achieve key goals? Does the business have capacity to grow, what are the opportunities for growth?
5
CAPACITY TO GROW
What is the capacity of the business to grow? Are there opportunities that could help the business to
achieve key goals? Does the business have capacity to grow, what are the opportunities for growth?
To understand how a business health check can help you make better decisions contact
Southern AG Management today.
Sample Farms – Historical Business Diagnostics
Ratio | 2018 | 2019 | 2020 | Weak Range | Weak Range |
Climatic Conditions | |||||
% Average GSR | 116% | 82% | 54% | <75% | >100% |
Solvency | |||||
Equity Ratio | 77% | 66% | 60% | < 60% | > 80% |
Net Worth | 3,692,701 | 4,689,480 | 4,516,642 | ||
Capital Efficiency | |||||
Return on Assets | 6.15% | 1.20% | 1.85% | < 2.5% | > 5% |
Return on Equity | 8% | 1.82% | 3.07% | < 2.5% | > 5% |
Asset Turnover Ratio | 23.8% | 13.0% | 16.2% | < 10% | > 20% |
Cost Efficiency | |||||
Operating Profit Ratio | 25.82% | 9.28% | 11.39% | < 20% | > 30% |
Net Profit Ratio | 25.83% | 9.29% | 11.42% | < 15% | > 30% |
Input Cost Ratio | 43.8% | 53.5% | 45.4% | > 40% | < 25% |
Overhead Cost Ratio | 19.2% | 22.9 % | 25.3% | > 40% | < 30% |
Finance Cost Ratio | 11.2% | 10.2% | 14.1% | > 15% | < 5% |
Depreciation Ratio | 8.3% | 10.1% | 16.9% | > 20% | < 10% |
Cost Efficiency | |||||
Interest Cover Ratio | 3.05 | 1.90 | 2.01 | < 1 time | >2 times |
Delivery of this service will require and includes:
- Three years taxation and management financial information.
- Communication between Southern Ag consultant and client to ensure validity of data wherever clarification is required.
For more information download PDF here :
