Financial Management in Agriculture

This course gives an overview and insight into the economics of the farm business, with a focus on financial management and accounting. Like corporate managers, farm managers continuously have to make decisions and control their business. There is a need to adapt their business to the current external environment and to anticipate future internal and external developments. For this purpose, farm managers need reliable financial data based on a well-defined accounting system, a good analysis of this data, and information for decision making. Stakeholders like banks, suppliers, and the government also have an interest in reliable data and information from farms. This course deals with the financial management and accounting of farm businesses both from the perspective of the farm manager and the other stakeholders.
Note: emphasis will be on both qualitative and (particularly) quantitative analysis and explanation.

After successful completion of this course students are expected to be able to:

• Analyse farm financial statements and accounts and use their information for financial analysis, control, and planning
• Benchmark an individual farm against past performance or other farms
• Make time-value of money related calculations such as annuity and return to investment
• Analyse the feasibility of financial plans and credit requests
• Analyse the capital structure and leverage of a farm and the way they impact growth and financial risk exposure
• Understand basic risk management aspects such as portfolio planning
• Understand the main principles of capital costs (including inflation and risk) and their relation to financial planning
• Carry out basic interest calculations
• Analyse trade-offs between leasing and buying in relation to capital costs

Assumed Knowledge:

Introduction to Business Economics (BEC10306) or equivalent.
Note: this course cannot be followed in combination with BEC51806 Agricultural Business Economics or BEC23306 Financial and Business Management due to partly overlapping contents.