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Enterprise Level Analysis Topics

Enterprise Level Analysis Topics. Agribusiness Finance LESE 306 Fall 2009. Building up from Enterprise Level. Enterprise #1 Production costs Overhead. Enterprise #n Production costs Overhead. Enterprise #2 Production costs Overhead. #1. #2. #1. #2. #1. #2.  #2. #1.

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Enterprise Level Analysis Topics

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  1. Enterprise Level Analysis Topics Agribusiness Finance LESE 306 Fall 2009

  2. Building up from Enterprise Level Enterprise #1 Production costs Overhead Enterprise #n Production costs Overhead Enterprise #2 Production costs Overhead #1 #2 #1 #2 #1 #2  #2 #1 Total Overhead • Two approaches: • Allocate total overhead using ABC accounting procedures • Sum the budgeted overhead at the enterprise level and check for consistency at the firm level (e.g., does Total overhead = Σ overheadi)

  3. Enterprise #1 Design of an Enterprise budget. Construct budget for all enterprises, multiply times level of activity and compare to ABC approach. Overhead:

  4. Enterprise #1 Calculating Breakeven Price…. PBE = TE÷ Q Overhead:

  5. Enterprise #1 Calculating Breakeven Price…. PBE = TE÷ Q = $2.44 Conclusion: Price could fall from $2.60 to $2.44 Overhead:

  6. Enterprise #1 Calculating Breakeven Quantity…. QBE = TE÷ P Overhead:

  7. Enterprise #1 Calculating Breakeven Quantity…. QBE = TE÷ P = 79.8 Conclusion: Yield could fall from 85 to 79.8 Overhead:

  8. Enterprise Performance Statistics: • 1. Breakeven analysis • 2. Rate of return on investment (expenses) per unit for ith product: • ROIi = profiti ÷ (VEi + FEi) • 3. Efficiency as measured by the variable expense ratio: • VERi = VEi÷ REVi • 4. Profitability as measured by ratio of share of profit relative to share of productive assets required: • SPRi = {profiti ÷ profiti} ÷ {Ai ÷ Ai}

  9. Contribution Analysis

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