Agriculture Reference
In-Depth Information
Plate 10.1
Tools
Like any professional, the agribusiness manager has a set of tools that can be used to assess the
fi nancial health of the fi rm. Photo courtesy of USDA.
Financial statements: their use in evaluating performance
Because they can be interpreted from differing points of view, a company's fi nancial state-
ments should provide enough perspectives to satisfy all interested parties. The community
looks at what the agribusiness is spending on being a good citizen. Members of a cooperative
are interested in the effi ciency and savings that result from patronage. Suppliers are inter-
ested in the fi rm's ability to market and pay for products. Customers are interested in the
long-term viability of the fi rm and its ability to provide products at a reasonable price and in
a timely manner. Employees are interested in reaching fi rm goals which, in turn, should
increase their compensation, while the board of directors is interested in the effectiveness of
the management team in using the fi rm's fi nancial resources in the most profi table manner.
A manager such as Barry Meade, president of Meade Food Brokerage, is inclined to
approach the business fi nancial statements primarily from two points of view. First, to eval-
uate how the business has performed, and to determine ways fi nancial information can be
used to improve decision-making in the future. Profi t is the primary gauge for success or
failure. Some fi rms will organize the fi rm into separate “profi t centers” to facilitate this
analysis. Second, the manager must also keep in mind that the fi nancial statements and their
analysis should provide complete, accurate, and timely information for lenders, investors,
and the government, since success requires the satisfaction of these interested parties.
When Pilar Fernandez invested in ConAgra, she had a high degree of interest in this
fi rm's profi ts and general health. However, her primary interest was centered on the rate of
