farmcfo.com.au · 0412 759 847Farm finance words
Thirty words you'll hear from a bank or accountant, in plain English. The full glossary guide has more.
| Agistment | Grazing stock on someone else's land for a fee, usually a rate per head per week. |
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| Amortising loan | A loan where each repayment covers interest and part of the principal, so the balance falls to nothing. |
| Annual review | The bank's yearly look at your facilities, using your statements, budget and cashflow. |
| BAS | The form a GST-registered business uses to report GST to the ATO. |
| Budget | A plan for the year's income and costs. It doesn't show when the money moves. |
| Cashflow forecast | A month-by-month list of cash in and out, with the bank balance at the end of each month. |
| c/kg lwt and c/kg cwt | Prices per kilogram of liveweight, or of carcase weight after slaughter. |
| Cost of production | What it costs to produce a kilogram of beef, lamb or pork, including a share of overheads. |
| Covenant | A promise in your loan agreement, such as keeping interest cover above a set level. |
| Current ratio | Current assets divided by current liabilities: can you pay the next 12 months of bills? |
| Debt service cover | How many times the cash the business earns covers interest and principal repayments. |
| Depreciation | The cost of machinery and buildings spread over their working life. Not a cash payment. |
| Drawings | Money the family takes out of the business for living costs. |
| Dressing percentage | Carcase weight divided by liveweight, times 100. |
| DSE | Dry sheep equivalent, a standard unit for comparing the feed needs of different stock. |
| EBIT | Earnings before interest and tax: the usual starting point for interest cover. |
| EBITDA | Earnings before interest, tax, depreciation and amortisation: closer to the cash earned. |
| Equity | What you own less what you owe. |
| Facility letter | The bank's letter setting out each loan or overdraft, with limits, rates, fees and conditions. |
| Farm management deposit | An ATO scheme for setting aside income in good years for leaner ones. |
| Financial year | In Australia, 1 July to 30 June. |
| Gross margin | Income from an enterprise less its variable costs. It leaves out overheads, so it isn't profit. |
| Guarantee | A promise by someone else to repay your debt if you can't. |
| Interest cover | How many times profit covers the interest bill, usually EBIT divided by interest. |
| LVR | Loan to value ratio: what you owe against what the security is worth, as a percentage. |
| Overdraft | A facility that lets your account go below zero, up to a limit. |
| Overheads | Costs that don't change with the size of an enterprise, such as rates, insurance and interest. |
| Principal | The amount borrowed. Principal repayments reduce the balance. |
| Security | What the bank can call on if the loan isn't repaid, such as a mortgage over land. |
| Working capital | Current assets less current liabilities: the money available to run the business. |
From the Farm CFO farm finance glossary guide.
Checked 26 October 2026. General information only. It doesn't take account of your circumstances and isn't tax, legal or credit advice. Farm CFO is a business name of Levelhead Capital Pty Ltd (ABN 15 703 134 918). farmcfo.com.au · 0412 759 847