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Text-based instructions - Video script

- Once you’ve entered the overhead costs which can be obtained from your profit and loss you come through to the section on the non-cash costs which is where we need to collect data about your inventory changes on-farm, depreciation and imputed labour. This enables us to determine the profit of the business, rather than just seeing the cash inflows and outflows.
- I’ll start with imputed labour which as you can see has a tool tick next to it. The imputed labour in the Farm Business Snapshop is based on the family labour that aren't paid in the business and it's equivalent to them working 50 hours a week, for 48 weeks of the year so it's a total of 2400 hours for the year. That's what a full-time equivalent is. If you work more than that number of hours, so for example you work 60 hours a week then you would say that that was 1.2 full-time equivalent.
- The imputed labour rate you notice is $76,800. So, if for example, you're working 60 hours a week so you would equate to 1.2 full-time equivalent you would multiply that by 1.2. If your total imputed labour figure of $92160. Now the depreciation in your business is not supposed to be the depreciation figure from your financial statements. That is generally overstating the total depreciation that we need when assessing profit. So the best rule to use is to use 10% of the total value of the plant and equipment in your business. That should include milking plant, any irrigation equipment that you have and all other plant equipment items like tractors, utes, motorbikes, hay and silage equipment and if you take a value of 10% of the total value of that so for this farm I'm going to say that they have $250,000 worth of plant equipment at 10% which makes up a figure of 25000.
- When we come to the inventory changes if you run a business that is what we classify steady state, so you are keeping livestock inventory relatively similar year on year, then you probably don't need to enter anything in the livestock inventory change. However, if you are in a growth phase or reducing your herd size, then you will want to enter something in here. You will note that there is some extra information about how you can calculate your livestock inventory change.
- Let's come to the feed inventory, which is the one that most people will have changes for year on year. Generally speaking, with concentrates there, doesn't tend to be a lot of inventory change across the year, because you normally hold a similar amount in the silo at the start and end of the year.
- Most of this change comes from hay and silage that’s conserved on-farm and retained at year-end. If for example for this financial year you had 50 tonne of grass silage on hand at the start of the year, at the end of the year you had 100 tonnes on hand, which assumes that you've had a relatively good year because you have conserved more across the year, and we say that’s valued at $200 a tonne we would say that there's an inventory difference of $10,000. In this situation as you can see if opening inventories were lower than closing, you would enter it as in negative figure. In this situation, I'm going to enter negative $10000 because that was the difference of the 50 tonne on hand at the start. 100 tonne on hand at the end valued at $200, which is the difference of $10,000 across the year.