Ratio Analysis in Farm Management

Agriculture plays predominant role in Indian economy. More than two thirds people in rural areas are engaged in agriculture and its allied activities. Presently agriculture is treated as an industry; cost benefit analysis is required for benefits of farmers. Most of the farmers are not maintaining proper accounting record and not using statistical and financial tools to study profitability of the production base activities. Ratio analysis techniques can be useful in managing the farm business by providing a check on the performance of assets and a warning as to potential area of risk. Combining of profitability/returns ratio, solvency ratio, liquidity ratio provide an excellent basis for decision making. Net earnings per acre, intensity of live stock production, labour and land use efficiency measures are appropriate indicators of the performance of farm. KeywordsLive stock, Yield, Return, Standard and Productivity.