1 Enterprise Analysis l The analysis evaluates the income and costs as they were in the past l The analysis answers the question What was the profit gained and what were reasons for it

2 Decisions concerning: Methods, Materials Equipment Calculating Performance Indicators Enterprise Analysis Production 1 Drawing Conclusions Performance: Technical and Economic values Budget External Data Production 2

3 The Goals of Enterprise Analysis l to evaluate the profitability, and the reasons for it. l to enable comparisons to other enterprises and other years. l to identify weak points in order to improve performance. l to supply data for public institutions and government. l to prepare budgets. l to prepare whole-farm plan

4 Income Variable Costs Owner Labor Costs Return to Capital and profit LaborVariableCapital Capital Costs Net profit Return to owner Labor, Capital and Profit Total Costs

5 Definitions of returns l Return to owner’s labor, capital and profit Revenue minus variable expenses (including hired labor) l Return to capital and profit Return to owner’s Labor, capital and profit minus the cost of owner’s Labor l Profit Return to owner’s labor and profit minus capital expenses