Work out net farm income instantly with clear inputs, formula shown and shareable results.
Net farm income is gross revenue less every cost of running the business: variable costs of production, fixed costs such as rent, insurance and permanent labour, and the non-cash charges of depreciation and interest. It is the figure that shows whether the farm is building or eroding wealth.
Net farm income
Net farm income = revenue - variable cost - fixed cost - depreciation and interest
Machinery and buildings wear out and must eventually be replaced. Ignoring depreciation shows a profit that quietly consumes the asset base.
No. Tax rules have their own depreciation schedules, allowances and exemptions for agricultural income. Use the tax computation for filing and this figure for management.