Explanations of the concepts
Sales revenues: Sales revenues are the VAT-exclusive value of products sold during the financial year in question (revenues from livestock, crop, and horticultural production).
Subsidies: Subsidies include national, co-financed, and fully EU-funded subsidies. This item includes both "direct subsidies" and subsidies paid coupled with the product price (e.g., milk production subsidy).
Turnover: Turnover, which describes the scale (volume) of operations, is the sum of sales revenues and subsidies.
Change in the value of product inventories: Product inventories include stocks of products intended for sale and so-called intermediate products (e.g., feed produced on the farm, including roughage). The values of the inventories are determined at current values at the turn of the year. The change in the value of inventories is calculated as the difference between the values at the end and the beginning of the year.
Change in the value of livestock: Livestock assets include the value of livestock kept for production and those raised for sale. Livestock values are determined at current values at the turn of the year. The change in the value of livestock is calculated as the difference between the values at the end and the beginning of the year.
Internal transfers: Internal transfers include the value of products transferred free of charge outside agriculture and horticulture (e.g., to the private household or other business activities).
Farm return, farm use: Farm return is the value of so-called intermediate products produced on the farm and used as production inputs (typically livestock feed and crop seeds). In the calculations, farm return and farm use as a cost item offset each other, meaning the value of products produced and consumed on the farm does not artificially increase figures like entrepreneurial income.
Other revenues: Other revenues from agriculture and horticulture include, among other things, rental income from real estate and machinery, as well as income from the sale of production inputs.
Total output / Gross return: Total output is the sum of the value of agricultural and horticultural production for the financial year (sales revenues, inventory changes, farm use of intermediate products, internal transfers outside the sector) and subsidies. It describes the scale of the enterprise's operations better than turnover when a significant portion of the financial year's production is tied up in inventories or growing livestock.
Variable costs: Includes, among other things, purchases of materials and supplies (fertilizers, feed, fuels and lubricants, electricity, seeds), changes in supply inventories, farm use (intermediate products), internal transfers (received from other sectors), purchased services, wages, and machinery rentals.
Fixed costs: Fixed costs include, among other things, the wage claim of the entrepreneur family, rents for buildings and arable land, maintenance costs of fixed assets, and insurance premiums.
Wage claim of the entrepreneur family: The cost arising from the use of the entrepreneur family's own labor is calculated by multiplying the number of working hours of the entrepreneur family--based on work records--by a pre-set annual hourly wage claim. The hourly wage claim is determined annually according to the hourly wage of an agricultural worker (including weekday public holiday allowances, working time reduction allowances, sick pay, occupational health care costs, annual holiday pay, and holiday bonuses).
Hourly wage claim by year:
YearEuroYearEuro
19987,06201214,50
19997,23201314,90
20007,57201415,10
20017,90201515,60
200210,80201615,80
200311,30201715,70
200411,70201816,00
200512,30201916,00
200612,40202016,00
200712,60202116,00
200813,00202216,10
200913,50202316,80
201014,00202417,20
201114,10202517,50
2026 17,70
Operating margin / EBITDA: The operating margin is the enterprise's operating result before depreciation and financial items. When examining the operating margin, it should be noted that it does not measure the result of labor- and capital-intensive enterprises equally, as capital costs and often also the costs of own labor are deducted in the income statement only after the operating margin.
Depreciation: Depreciation is calculated asset by asset (each machine, building, etc., separately) as planned depreciation based on current values derived from replacement values. A declining balance depreciation method (constant percentage) is used, where the depreciation percentage is determined by fixed asset groups:
Buildings: 9% Machinery: 18% Tractors: 14-22% Combine harvesters: 12-18% Subsurface drainage: 5%
Operating profit / EBIT: Operating profit is obtained when planned depreciation is deducted from the operating margin. Operating profit measures the result of the enterprise's actual operations before financial items and taxes.
Financial income: Interest and other financial income generated by agricultural and horticultural assets.
Interest and financial expenses: Interest and other financial expenses paid on agricultural and horticultural loans.
Net result: The net result is obtained when financial income is added to the operating profit, and interest and other financial expenses are deducted. The net result remains as interest in the equity invested in the business. When examining the net result, it should be noted that taxes have not been deducted as an item of profit distribution.
Interest claim on equity: The cost arising from the use of the entrepreneur family's own equity. It is calculated by multiplying the equity--calculated as the average of the beginning and end of the financial year--by the imputed interest rate. The imputed interest rate was five percent (5%) until 2009. In 2010, a calculation system was introduced that determines a risk-based interest rate for each company based on its specific risk profile. The average calculated interest rate (%) for each group can be found in the cost breakdown report below the 'interest claim on equity' variable. Equity is calculated by deducting liabilities from agricultural and horticultural assets. Assets include land property (fields), buildings, machinery and equipment, subsurface drainage, other fixed assets, shares and holdings, inventories of production inputs, product inventories (including roughage inventories), livestock, other current assets, receivables, and financial assets.
Entrepreneur's profit: Entrepreneur's profit describes the euro-denominated (absolute) profitability of the enterprise. It is obtained by deducting all production costs (including imputed depreciation, wage claims, and interest claims) from the total output. If the entrepreneur's profit is negative, the enterprise has made a loss. Returns would need to be higher, or costs lower, by the amount of these losses for the own labor and own equity to have received compensation that meets the required claims.
|
