Farm Model

The model's biological engine starts with the property's carrying capacity in Dry Sheep Equivalents, calculated as farm size in hectares multiplied by DSE per hectare. This sets a maximum herd size.

• Cattle and sheep numbers roll forward each year from opening head counts using births, sales, deaths and a forced cull. Cattle births in year one come from opening breeders multiplied by a weaning rate; from year two onward births use the prior year's closing breeder count, not a static opening figure.
• Sheep follow a similar pattern. When total DSE exceeds the cap, a forced cull row removes the excess, preventing biologically impossible herd growth.

Closing breeder numbers also set the biological asset value on the balance sheet, which is separate from working capital.

Revenue is built from physical animal numbers and market prices, never from a smooth growth percentage. Cattle revenue equals head sold multiplied by average live weight, dressing percentage and beef price per kilogram of carcass weight.

• Lamb revenue uses head sold, carcass weight and lamb price. Wool revenue uses the average of opening and closing sheep numbers, fleece weight, clean yield and wool price.
• Cost of goods sold includes supplementary feed, veterinary costs, shearing, transport and saleyard commission. Supplementary feeding is a winter or drought top-up calculated as total head multiplied by feeding days per year, daily intake and feed price per tonne; feeding days default to 60, reflecting a pasture-based system where pasture supplies most nutrition.

Operating expenses such as labour, fuel, repairs, rates, insurance and administration are then deducted to reach EBITDA.

All debt is pre-existing at day zero, so the cash flow statement shows only principal repayments, never drawdowns. The land mortgage amortises over 25 years at a fixed rate, and the equipment loan over seven years.

• A seasonal overdraft is drawn when free cash flow before overdraft is negative and repaid when positive. Interest is calculated on opening debt balances to avoid circular references.
• The cash flow statement uses the indirect method, adding back depreciation to net income and adjusting for changes in receivables, inventory and payables. Biological asset fair value movements are excluded; only cash from actual animal and wool sales is recognised.

Capital expenditure includes maintenance at a percentage of opening property, plant and equipment plus modest growth spending, while land value is held constant with no appreciation assumed.

The model produces an income statement, balance sheet and cash flow statement for each of five years, together with a checks sheet. Key outputs include EBITDA, net income, operating cash flow, free cash flow and debt service coverage ratio.

• Validation checks confirm that the balance sheet balances, herd reconciliations sum to zero, the DSE cap is respected, cash remains non-negative, the mortgage declines and the DSCR stays above its covenant. Opening retained earnings are calculated from opening assets and liabilities rather than hardcoded.
• Users can change named assumptions such as weaning rates, feeding days, prices and interest rates to test how the operation responds to different seasons or market conditions. The model is designed for evaluating an acquisition or operating plan, not for live trading.