Financial Ratio Analysis that Challenges the Dairy Farmers to Enhance their Ability in Financial Management

Abstract

              For sustainable dairy farm businesses in rural areas, farmers need skills both in farm management and financial management which are essential knowledge that can enrich the existing knowledge of the farmers. The research attempts to find out how the financial ratio analysis can help dairy farmers enhance their ability in financial management of dairy farms more efficiently.  The target group comprises 10 outstanding dairy farms in Maha Sarakham Province of Thailand , selected based on such criteria as the ability in developing a body of financial knowledge, having  financial data records, favorable attitude in the use of financial data, patience, and following criteria as a co-researcher status. In addition, the farmer subjects were voluntarily participated in synthesizing knowledge, searching for financial skills needed, financial analysis as well as suggesting guidelines to improve their ability in farm management and problem solutions.  The obtained qualitative data are analyzed through a focus group discussion and knowledge management of ten volunteers from farms regardless of sizes, and the researcher. The research results reveal that three aspects of financial ratio analysis are needed; namely, the liquidity ratio, the profitability ratio and the solvency ratio, and that these three ratios are related.