Financial Efficiency Report

The Financial Efficiency report shows how efficiently the ranch business is projected to use its assets and expenses to generate revenue during the year following the inventory date. Ranch Vision follows Farm Financial Standards Council (FFSC) standards for these measures.

Asset Turnover Ratio

This measures how efficiently assets are used to generate gross revenue. A higher ratio indicates that the ranch is generating more revenue relative to the value of the assets committed to the operation.

Operating Expense Ratio

This shows the proportion of gross revenue used to cover operating expenses. A larger ratio means more of each dollar of gross revenue is being consumed by operating expenses.

Depreciation Expense Ratio

This shows the proportion of gross revenue represented by depreciation expense and indicates how much revenue is being absorbed by the economic cost associated with depreciable assets.

Interest Expense Ratio

This shows the proportion of gross revenue used for interest expense and indicates how much revenue is being absorbed by the cost of borrowed capital.

Net Operating Income Ratio

This shows the proportion of gross revenue remaining as income from operations after the applicable expenses are accounted for.

Together, these measures help show where each dollar of ranch revenue goes and how efficiently the ranch’s resources are being used to generate that revenue. They are also important information for potential lenders or investors.

How to use it: Use Financial Efficiency to identify where projected revenue is being consumed and evaluate how efficiently different ranch plans use the business’s resources.