An economic analysis of cost and returns, is an indicator of profitability in farming

activity. However, a general descriptive analysis of costs and returns, is no

substitute for a vigorous production function analysis which serves well as an
indicator of the efficiency of factors' proportion in production.

Cost and Return Analysis

The Cost and Return Analysis is the most common method of determining the profitability of a farm
business. The Net Return is also referred to as the Net Income. Net Return is the profit from the
years operation and represents the return to the owner for persona 1 labor, management, and
equity used in the farm.

Before making a complete budget for the establishment of a finisher farm, it is important to identify
the technical and financial starting points. These starting points will be used in the Cost and Return
Analysis of your farm.