Economic analysis of nonindustrial private forestry. An example based on suggested accounting principles. Conference paper
1996
Hyder, A.S. | Loennstedt, L. | Penttinen, M.
Nonindustrial private forest (NIPF) owners supply the main part of roundwood in Scandinavia. Their forest enterprises are the backbone of forestry. For the forest owner timber supply is business. Other products and services, and environmental issues do typically have less relevance in the owner's forestry economy. It gives him or her income and return on invested capital. The economic result will affect decisions taken by the forest owner. The owner has to decide whether to invest more in his property (planting, cleaning, building of forest roads) or disinvest (sell timber or the holding). He or she has to find ways to increase revenue and cut costs. However, generally accepted accounting principles for NIPF owners are lacking. Applying business economic accounting principles and forestry accounting traditions, proposed principles for profit and loss accounts and balance sheets for NIPF owners an economic analysis of a medium sized forest holding is presented. Key concepts in the profit and loss account are realized net profit of the enterprise and calculated profit of the property. Other profit measurements that are used are gross margin, forestry margin, operation profit. Calculated profit is based on adjusted net profit. Most important, however, is to consider the change in the holding's market value caused by changes in volume, quality and price, respectively. However, this type of research can contribute to an increase of the economic awareness of many private owners.
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