Proceedings

PR – Developing A Financial Ratio Benchmarking System For GWK District Farmers In South Africa (p366-379)

Knowing the performance of competing farmers in an industry is very important. This provides farmers with an important tool to evaluate their position against the position of their competitors. Benchmarking is an effective method to evaluate the performance of a farm against other competing farms. The research is aimed at developing a benchmarking system for farmers within the GWK district, South Africa, using the Sweet 16 financial ratios as a guideline. This will provide the farmer with a tool to evaluate his performance against competitors from the specific district. The financial analysis was obtained from GWK cooperative who use the financial statements of farmers in their study groups. These statements were analysed using Microsoft Excel, where the data was analysed into 14 ratios, based on the Sweet 16 ratios used by the Farm Financial Standards Council in the USA. The main results from this research show that there are significant differences in the financial performance and correlation from the enterprises in the district. Differences in the ratios can be influenced by several factors, including the cash flow and leverage situation of the farm, which will require different management strategies in order to improve financial ratios of different farms.

Keywords: Financial statements, financial ratios, Benchmarking

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Author(s): Henning, J.I.F., Strydom, D.B., Willemse, B.J.

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Organizations(s): University of the Free State