Standardized Performance Analysis production calculations

Written by Dr. E. D. Hamilton, University of Nebraska-Lincoln
Great Plains Veterinary Educational Center, February 14, 1996.

Owner Information. Name, mailing address with zip code, phone
number, fiscal year of the analysis, herd name, and location of ranch. 
Production information should include the date the mature cows are
exposed to the bulls, the length of the breeding season, the  pregnancy
check date if checked, the weaning date, and the beginning date for the
calving season.  The beginning of calving season is defined as the date
the third mature cow calves.
 
1. Exposed Females - This is the number of females in the breeding 
herd.  There are some adjustments that must be made.  Do not include 
females exposed but not intended to be calved.  Females transferred out
of the breeding herd during breeding should not be included.  Females 
transferred into the breeding herd during breeding should be included.
 
2. Pairs or Pregnant Females Sold/Transferred Out of Herd Before
Weaning - You should only include known pregnant females or females
which have calved and are removed as a pair (with live calf) before
weaning.
 
3. Pairs or Pregnant Females Purchased/Transferred Into Herd
Before Weaning - You should only include known pregnant females or
females which have a live calf at side at the time of purchase/transfer.
 
4. Adjusted Exposed Female Inventory - This is an inventory of
exposed females that results from the beginning inventory plus all
adjustments.  This is the divisor for weaning % and other reproduction
and production measurements.
 
5. Total Head of Calves Weaned - This is a head count of all calves 
actually weaned during the weaning period.  Do not include nursing
calves removed before weaning as a cow-calf pair.  Purchased grafted
calves require some adjustments.  The number of purchased grafted
calves weaned should not be include in the reproductive measurements
(calving %,weaning %).  However, purchased grafted calves weaned
are included in the revenue and pounds weaned sections.  If purchased
grafted calves are a part of this analysis, then you will need to adjust
item 5 before calculating the weaning % in item 9.  Item 5 may be
entered based on sex of calves or as the total of all calves.
 
6. Total Pounds of Calves Weaned - Enter the total pounds weaned
by calf sex or all calves.  Include the weight of the purchased grafted
calves.  Do not include the weight of calves removed as pairs (not
weaned).  The weight should be determined at the time of weaning. 
These values may be determined by multiplying item 7 with item 5.
 
7. Average Weight of Calves Weaned - Enter the average weaning
weight per calf by sex of calf or all calves.  These values may be
determined by dividing item 6 by item 5.  If the weight for purchased
grafted calves are included in item 6, then the herd count of calves
weaned (item 5) must be adjusted to include purchased grafted calves.
 
8.  Average Price per Pound of Calves - This value should be
determined from the net weaned calf revenue divided by the total
pounds weaned (item 6).  The net weaned calf revenue should include
the net value of all weaned calves sold, a non-cash value for all retained
calves at weaning, and a base value for all replacement calves weaned.
 
9. Percent Weaned Calves - (Item 5 divided by item 4) times 100
equals weaning percent.  Do not include purchased grafted calves in
item 5.
 
10. Total Dollar Value of All Calves Weaned - Item 8 times item 6. 
The value of purchased grafted calves weaned and the value at weaning
of all retained calves should be included.  This is the net value of the
weaned calf crop.
 
11. Pounds Weaned per Exposed Female - Item 6 divided by item 4. 
This measurement includes the actual weaning weight of all weaned
calves (include purchased grafted calves) in item 6.  Item 4 is the
adjusted exposed female count.
 
12. Total Acres - This is the total adjusted acres for grazing and
raised feed land used by the cow-calf enterprise.  This includes both
owned and leased acres for grazing and raised feed land.  The acres are
adjusted for use by other enterprises.  For example if a stocker
enterprise utilizes some of the same acres used by the cow-calf
enterprise then the acres shared by the two enterprises must be
proportioned to each of the enterprises.
 
13. Total Breeding Females - This is the size of the cow herd.  This
determined by the head count of all exposed females, both mature cows
and replacement heifers, still in the herd on the first day of the fiscal
year.  This represents the number of exposed females on the beginning
balance sheet.

SPA-EZ
Financial Calculations --
Modified Cost Basis Balance Sheet

Assets.  Balance sheets are dated and should be for the first day and the
last day of the fiscal year.  These are the assets owned by the enterprise. 
If the use of the asset is shared by another enterprise, then its value
must be prorated between the enterprises based on use.  Assets are
categorized as either current or non-current.  The value of the asset
should be its book value (original cost less accumulated depreciation)
or base value (accumulated cost).
 
14. Feed Inventory - Feed inventory should include all feed in
inventory (raised and purchased) on hand on the date of the balance
sheet.  The raised feed should be valued at its accumulated cost basis. 
If its cost value is not available, use its fair market value.  If the types
and quantity of feed is available, show the detail.  The pounds of
roughage should be calculated on an air dried basis. 
 
15. Prepaid Expenses - These are expense items that have been paid
for but not received and not used by the enterprise.  They will be listed
as a current asset.  An example would be feed that was paid for before
the end of the year but not in the beginning year feed inventory.
 
16. Cash (Checking, Savings, etc.) - This is the checking account
balance on the date of the balance sheet as well as any savings accounts
assigned to the enterprise.
 
17. Miscellaneous - All current assets not listed above should be
entered here.  Only list the value assigned to the cow-calf enterprise.
 
18. Total Current Assets - This is the total of the current assets listed
above.
 
19. Machinery and Equipment - Enter the book value of all
equipment and machinery used in the enterprise.  If the equipment is
used by more than one enterprise, proportion the value across the
enterprises involved.
 
20. Real Estate, Buildings, and Improvements - Enter the cost basis
for the real estate and the book value for the improvements and
buildings.  Proportion the value to the amount utilized by the enterprise. 
For example, if the grazing acres are used by both a cow-calf enterprise
and a stocker enterprise at the proportions of 70% and 30%
respectively, then the cost value of the grazing acres should be
proportion 70/30 also.
 
Breeding Cattle.  This is the inventory count and value of all females
and males in the herd on the date of the balance sheet.  If possible,
break this down by age of animal.  For example, a replacement heifer
would have a different value than a mature cow.  Purchased animals
should be valued at their book value (original cost less accumulated
depreciation) and raised animals should be valued at a base value.  The
base value for raised animals should approximate the accumulated cost
to get the animals to that point.  The base value should not change from
year to year after it has been established.  For example, if it has been
established that for a given herd replacement heifers should be valued at
$450 each, bred heifers valued at $550, and mature cows valued at
$650, then these same values should be used each year and not changed
over time or with changing market conditions.
 
21. Replacement Heifers (1 yr. olds) - Enter the head count and the
base value of the raised replacement heifers for the date of the balance
sheet. The total value should include the total value (using base value
concept) of the raised replacement heifers plus the book value of the
purchased replacement heifers.
 
22. Bred Heifers (2 yr. olds) - Enter the head count and the base
value of the raised bred heifers for the date of the balance sheet. The
total value should include the total value (using base value concept) of
the raised bred heifers plus the book value of the purchased bred
heifers.
 
23. Mature Cows - Enter the head count and the base value of the
raised mature cows for the date of the balance sheet. The total value
should include the total value (using base value concept) of the raised
mature cows plus the book value of the purchased mature cows.
 
24. Bulls - Enter the head count and the base value of the raised
bulls for the date of the balance sheet. The total value should include
the total value (using base value concept) of the raised bulls plus the
book value of the purchased bulls.
 
25. Other Non-Current Assets (Horses, etc.) - Enter the book value
of all other non-current assets not listed above.
 
26. Total Non-Current Assets - This is the total value of all non-
current assets.
 
27. Total Assets - This is the total value of all assets assigned  to the
cow-calf enterprise.
 
Liabilities.  These are the debts incurred by the enterprise.  Proportion
the debts according to the proportion used by the cow-calf enterprise. 
The debts are categorized into current and non-current liabilities.  Use
pre-tax values.
 
28. Current Liabilities - Enter the total of all accounts due, notes
payable, accrued interest, accrued taxes, and current part of non-current
debt.
 
29. Non-Current Liabilities - Enter the total non-current of all non-
current debt.  This would include the non-current part of debt on
equipment, real estate, livestock, machinery, etc. that is utilized by the
cow-calf enterprise.

30. Total Liabilities - This is the sum of current and non-current
liabilities.
 
Deferred Taxes and Opportunity Cost are not included in this analysis. 
The analysis is a pre-tax financial analysis.  The complete SPA analysis
is needed to deal with this and other more detailed issues.

SPA-EZ
Financial Calculations --
Accrual Adjusted Income Statement

Revenue.  Both cash and non-cash revenues are recognized.  Only
revenue earned by the cow-calf enterprise during the fiscal year is
accounted for.
 
31. Weaned Calves - The value of the weaned calf crop is given in
item 10.  This should be net amount less the cost of selling.  Remember
to include base value of replacement animals, non-cash value of
retained animals, and value of purchased grafted calves.  Values are
determined at weaning.
 
32. Gain/Loss on Culls - The gain/loss on culls must be determined
from the value shown on the beginning balance sheet for that animal. 
The gain/loss is the net market value received less the value used on the
beginning balance sheet (base value and/or book value).  Enter the head
count culled by category, the average price received per head, and the
base value.  Animals on the beginning balance sheet that die during the
fiscal year will be shown as a loss in this section.  The amount of the
loss will be the value of that animal on the beginning balance sheet. 
 
33. Change in Base Value - Enter the head count from the ending
balance sheet that changed categories (animals that were on the
beginning balance sheet and ending balance sheet).  Enter the base
value used on the beginning balance sheet and the ending balance sheet. 
Subtract the total for ending base value from the total for beginning
base value.  The change in base value is the difference between the
established base values.  For example, if replacement heifers, bred
heifers, and mature cows are valued at $450, $550, $650 respectively,
the change in base value is $100 for each category.  If a replacement
heifer is on the beginning balance sheet at $450, this heifer would be on
the ending balance sheet as a bred heifer at $550.  Thus, there is a $100
increase in base value that is recognized as non-cash revenue on the
income statement.  The calculation requires multiplying the head count
on the ending balance sheet that moved to the next age category (from
beginning balance sheet) times the change in base value (i.e. $100). 
Total change in base value of each category is summed in item 33.
 
34. Other Non-Calf Revenues - Sum all miscellaneous revenues that
are allocated to the cow-calf enterprise.  Accrual adjustments to revenue
are included in this item.  For example the beginning accounts
receivable is subtracted from the ending accounts receivable and the
difference is included in item 34.
 
35. Total Revenue - This sum of revenues (items 31-34) with 
accrual adjustments.
 
Expenses (Cash and Non-Cash).  Proportion expenses to different enterprises 
if multiple enterprises exist.  For example, only change the cow-calf 
enterprise for the purchased feed that was used by the enterprise.  Do not 
charge for purchased feed that was used by the backgrounding enterprise.  
Categorize expenses if possible.  Include in the Labor, Management, Family 
Living category an expense for the labor the family members contributed to 
the cow-calf enterprise.  The value should approximate the amount that would 
have been paid to a non-family member to perform the same job.  The 
depreciation expense would include all depreciation (equipment,
machinery, livestock, etc.) allocated to the enterprise based on its
utilization by the enterprise (check balance sheet allocations).  Changes
in inventories/accounts are accrual adjustments that are very important
to the analysis.  The changes are calculated from the beginning and
ending balance sheet differences for each category.  For example, if the
beginning balance sheet value for feed inventory is $50,000 and the
ending balance sheet value for feed inventory is $30,000, then there is a
decrease in feed inventory of $20,000 (charge in inventory).  This
decrease (negative change) in inventory would be added to the income
statement as a positive number to show an increase in expenses.  This
logic should be followed for asset accounts such as inventories,
accounts receivable, and notes receivable.  A decrease in a liability
account such as accounts payable, notes due, interest due, or taxes due
would require a negative expense (decrease in expenses) on the income
statement.
 
36.  Total Expenses - This is the sum of all expenses with accrual 
adjustments.
 
37.  Annual Cow Cost - Item 36 divided by item 13.
 
38.  Non-Calf Revenue Adjusted Expenses - Item 36 minus items (32+33+34).
 
39.  Calf Breakeven - Item 38 divided by item 6.
 
40.  Net Income per Cow - (Item 35 minus item 36) divided by item 13.
 
41.  Total Net Income - Item 35 minus item 36.
 
42.  Year Average Asset Value - (Item 27a plus 27b) divided by 2.
 
43.  ROA% - [(Item 35 minus item 36 plus Interest) divided by 
item 42] times 100.