BUSINESS SUCCESS: WHAT FACTORS REALLY MATTER?



of these three financial performance criterions is included in a FARM Assistance projection.
Therefore, the data is available to include each in an overall index of success. Profit is measured
by the ten-year average Return on Assets. The annual percent change in real net worth, averaged
for the ten-year projection period is used to measure equity growth. The average probability of
cash flow deficits measures the liquidity risk of the farm or ranch. An annual cash shortfall is
typically refinanced and added to the following year’s operating note. Therefore, we also refer
to this measure as the probability of refinancing carry over debts. The index of success is
defined by:

Success = ROA + %∆RNW + 0.5*Prob(cash<0)

Table 1 contains the average, minimum, and maximum success values for different
groups of FARM Assistance subscribers. The average success index value for all 375 farms is

Table 1. Success Index* by Farm Groups

Factor

__________All

Ranked by Success Index

Crops1

Livestock2

Diversified3

_______Top

Middle

Bottom

Number of Farms

375

125

125

125

278

47

50

Average Success Index

4.3

23.8

7.8

-18.8

7.6

-12.4

1.6

Maximum Success Index

59.5

59.5

12.5

2.3

59.5

22.2

49.1

______________Minimum Success Index_____________

-84.5

_________12.6

2.3

-84.5

_________-76.8

-74.6

________-84.5

* Success Index = AvgROA + Avg%ChangeRNW - 0.25(Probability of Ref.)

1 Crop sales account for more than 75% of all farm receipts

2 Livestock sales account for more than 75% of all farm receipts

3 Farm can not be classified as primarily crop or livestock

4.3 with the most successful farm achieving a 59.5 value and negative 84.5 representing the least
successful operation. The operations are divided into three success categories. The top third of
the operations, rank by success index, has an average index value of 23.8, and an average
success index of 7.8 and negative 18.8 represent the middle and bottom thirds respectively. In
terms of percentile rankings, the 33rd percentile is a 2.3 index value and the 66th percentile is a
12.5 success index. The operations are also categorized by production type. The majority of the



More intriguing information

1. What should educational research do, and how should it do it? A response to “Will a clinical approach make educational research more relevant to practice” by Jacquelien Bulterman-Bos
2. Education Responses to Climate Change and Quality: Two Parts of the Same Agenda?
3. BODY LANGUAGE IS OF PARTICULAR IMPORTANCE IN LARGE GROUPS
4. The name is absent
5. TOMOGRAPHIC IMAGE RECONSTRUCTION OF FAN-BEAM PROJECTIONS WITH EQUIDISTANT DETECTORS USING PARTIALLY CONNECTED NEURAL NETWORKS
6. The name is absent
7. The name is absent
8. National curriculum assessment: how to make it better
9. A NEW PERSPECTIVE ON UNDERINVESTMENT IN AGRICULTURAL R&D
10. Convergence in TFP among Italian Regions - Panel Unit Roots with Heterogeneity and Cross Sectional Dependence