Financial benchmarking analysis: Northern Cape farmers

["Benchmarking (Management)","Organizational effectiveness","Financial statements","Farm corporations","Farmerseconomic aspects","Data envelopment analysis","GWK trading area","Financial analysis","sweet 16","Financial measurements","Correlation","Dissertation (M.Com. (Agricultural Economics))--University of the Free State, 2011","South Africa"]

Henning, J. I. F. ; ["Strydom, D. B.","Willemse, B. J."]

University of the Free State

Others  :  http://scholar.ufs.ac.za/xmlui/bitstream/11660/1067/1/HenningJIF.pdf

瑞士|英语

来源: University of Iowa

【 摘 要 】

English: The primary objective of the study was to develop a financial measurement-basedbenchmarking system for GWK on the financial status of their producers. Financialbenchmarking systems provide the producers with opportunities to evaluate their pastand current financial performance, not only to their own financial status but also to otherproducers that are included in the benchmarking data. To have a better understandingof the performance of the farm's financial status and to have a possible explanation ofwhy certain changes had occurred, the first secondary objective was to compare trendsof the whole agriculture sector of South Africa with those that occurred to the GWKproducers in the study. It was found that the GWK producers had followed more or lessthe same trends than those experienced by the South African agricultural sector.After the trends were compared between GWK producers and the South Africanagricultural sector, the limited financial statements obtained from GWK, were analyzedby calculating the financial measurements for each farm over the five years. This wasdone in order to determine the border values that can be used to divide eachmeasurement into three performance groups. These groups will be used to determinethe position for each measurement of a farm relevant to the other farms in thebenchmarking system. When the producer has seen the indication that a certainmeasurement is in the midpoint of bottom performance groups, he knows there areother options available to improve that position, as is already being done by otherproducers. This leads to another secondary objective that was identified and analyzed. When a producer wants to improve one or even more than one financial measurement,certain changes have to be made that will influence the income statement and balancesheet. As these statements are interactive and a change in one area of the statementwill have an influence on the overall results, it is necessary to have an idea or indicationof what these influences can be. To provide some background on what the possibleoutcomes can be the correlation between the measurements and their determinantswere determined. These correlations will provide important information on what thepossible results of a certain change by a producer on a farm can be. As the financialmarket is ever-changing, the changes cannot always be hundred percent predictable,but one can at least provide an idea of what can be expected.The last secondary objective is to rank the farms according to their operating efficiencyfor each enterprise, using DEA. As results indicated, this method of benchmarking canbe used in coordination with the border measurement benchmarking system. Thedifference that exists is that the DEA benchmarking system only divides the farms intotwo groups as being efficient and inefficient. These two groups can be compared to theresults obtained from the border measurement benchmarking system; the farmsidentified as being the efficient ones are mostly the farms that had most of their financialmeasurements in the top performance and the top half of the midpoint performancegroups. The opposite is also true for the farms identified as being inefficient.Conclusions and recommendations from the study include that a benchmarking systemcan provide very important information to producers on the performance of their farms,not only to past performance, but also with regard to their rivals. When certainadjustments have to be made to improve the performance of the farm, it is important toremember the possible correlation that exists between the financial measurements andwhat the possible outcomes can be. The correlation between the measurements is alsoa point that is available for future research. Lastly, it is recommended that when afarm's financial position is benchmarked to other competitors, more than onebenchmarking system is to be used. This will provide more accurate information to theactual performance of the farm, as a wider spectrum is covered by using for examplethe border measurement and DEA benchmarking systems.