University of Maryland Extension

What is enterprise profit?

Author: 
Dale M. Johnson, Extension Specialist, Farm Management

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We have discussed profits in relation to the whole farm. Since you likely produce several agricultural products, you can view each different crop or livestock enterprise as a separate profit center so you can determine which enterprises contribute more to the overall profit of the farm and which ones contribute less. You can then decide what to do with the less profitable enterprises. Calculating profits for individual enterprises is similar to calculating profits for the entire farm, with one difference. In your calculations, you include only income and expenses pertaining to the individual enterprise. This process is called enterprise budgeting. Methods for enterprise budgeting are also included in Richard Wiswall’s book mentioned earlier.

 
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Using an income statement to calculate and project profit

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