This fact sheet explains how to use a profit and loss budget as an accurate measure of farm efficiency. The fact sheet includes definitions and a case study example.

Key points

• Profit and loss is the true measure needed to determine a business’s long-term financial sustainability.
• Profitability and cashflow are not the same measurements.
• Profitability is a key measure to determine farm efficiency.
• Consistent application of sound business management principles will ensure a healthy, sustainable business.

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