CS - Benchmarking Recommendations Using A Sample Of Kansas Farms

The purpose of this paper was to develop recommendations for benchmarking. The operating profit margin ratio and the asset turnover ratio were the chosen benchmarks. These ratios were computed for each farm in the data set using one-year average data through five-year average data. Farms were examined at the state level, regional level, and by using the percent of labor devoted to crop and livestock production. Results suggest that five years worth of data should be used to benchmark and that farms should be compared to those that are similar in terms of whether they devote more labor to crop or livestock production. It is also recommended that evaluations are made by categorizing farms into quartiles based on the financial ratio used to benchmark.

Keywords: Benchmarking, Profit Margin, Asset Turnover