Outline of accounting for non-industrial private woodlots.

Hyder, Akmal S.; Lönnstedt, Lars; Penttinen, Markku

doi:10.14214/sf.a9167

Cited by 2 publications

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“…The decision-making of NIPF owners benefits from data on (i) profitability (financial accounting), (ii) cost structure (management accounting), including (iii) product costs, and (vi) forest investment/improvement (project accounting) (Hyder et al 1994). There are two alternative approaches to the calculations: (a) to measure the net margin of the forestry entrepreneur in the spirit of the private enterprise theory, or (b) measure the net margin of the forest property, which can be compared with other forest holdings and investments (Schneider 1970).…”

Section: Profit Return and Time Preferencementioning

confidence: 99%

“…The former is hereafter referred to as the net profit of the enterprise and the latter as the calculated profit of the property (Hyder et al 1999). Both approaches have inspired profit and loss statement as well as balance sheet proposals for NIPF enterprises (Hyder et al 1994). The strictly regulated accounting is complemented by contingent adjustments focusing on change in forest value and compensation for the owner's own work (Hyder et al 1999).…”

Section: Profit Return and Time Preferencementioning

confidence: 99%

“…A proposal for the classification of forestry costs inspired by the Central European cost accounting solutions with groupings into direct and overhead costs, the first of which contains the groups: direct logging and direct silvicultural costs (Sekot 1987(Sekot , 1998Jöbstl 1990) has been modified for Scandinavian forestry (Hyder et al 1994). Empirical evidence reveals the role of harvesting (cutting as well as haulage and storage together) performed by the forest owner, as well as the surprising differences in silviculture and overhead costs ( Figure 4).…”

Section: 12 Over 12 Roe In Per Centmentioning

confidence: 99%

“…The constructive criticism and support of Professor Vesa Puttonen from the Helsinki School of Economics has been crucial in the publishing process. Some of the papers are results of co-operation with Professor Lars Lönnstedt at the Swedish University of Agricultural Sciences (e.g., Hyder et al 1994Hyder et al , 1997Hyder et al , 1999, which has provided new ideas and a Scandinavian perspective. Professor Timo Pukkala, Teppo Martikainen, Matti Keloharju and Markku Kallio have commented on the research papers.…”

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Portfolio management and the competitiveness of forest ownership

Penttinen¹

2007

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Few forms of production can compete with forestry regarding the amount of conflicting theories, paradigms, beliefs, passions and interests that have been engendered. This is also true for forest economics, where forest rent theory and land rent theory have been accompanied with interest theory to produce various foundations for profitability calculations. Many researchers and practitioners assume a steady-state economy, but most rely on the deterministic world in their modelling. However, risk inclusion has recently attained a dominant position in the investment analyses. The purpose of this study has been to develop novel solutions and constructions for return on forest ownership, and to apply new approaches to the profitability of forestry and the assessment of competitiveness of non-industrial forest ownership.First, financial and cost accounting has been developed for non-industrial private forestry (NIPF), implementing the solutions for a test enterprise. Financial accounting will also be developed for both the net profit of the enterprise and the calculated profit of the property applying extensive, balance and intensive strategies. The requirements of the International Financial Reporting Standards (IFRS) were researched and implemented in the forestry accounting of agricultural profitability book-keeping farms and the EconomyDoctor service of the MTT Agrifood Research Finland.. Secondly, returns on stocks, debentures, offices, bonds and housing were estimated in addition to the return on forest ownership estimates, showing that NIPF ownership was not as competitive as expected, with a statistically significant correlation with private housing and the market portfolio. The return on NIPF ownership was divided into price change, felling, cost and change in growing stock components, the first of which was compared with the inflation rate.Finally, optimal harvesting age solutions and numerical results recognising price drift, price and growth volatility, volume growth, value growth and stand establishment costs, as well as thinning benefits, were provided by proxying the stumpage price and volume growth processes by geometric Brownian motions. Moreover, comparative static and sensitivity solutions, including numerical results, showed the impact of the discount rate, price drift, and price and growth volatilities on optimal harvesting age.In all, solutions have been implemented in the METINFO Internet service and tested for the farm accountancy data network (FADN) of the EU. Moreover, developed optimal rotation programs can be incorporated into forest management planning software products such as MOTTI and MELA, which are widely used in Finland.Keywords: modern portfolio theory, accounting, profitability of forestry, return on forest ownership, return components of forest ownership, optimal timber harvesting age The bottleneck in this research has been the availability of empirical evidence. The leader of the Forestry Centre Lapland, Jukka Ylimartimo, proposed that jointly-owned forests (JOFs) of Lapl...

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Section: Profit Return and Time Preferencementioning

confidence: 99%

Section: Profit Return and Time Preferencementioning

confidence: 99%

Section: 12 Over 12 Roe In Per Centmentioning

confidence: 99%

mentioning

confidence: 99%

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Portfolio management and the competitiveness of forest ownership

Penttinen¹

2007

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“…An economic analysis of a medium-sized forest holding is presented below, to illustrate the importance of this type of adjustment. Our analysis is based on a suggested structure for profit and loss accounts and balance sheets for NIPF owners (Hyder et al, 1994(Hyder et al, , 1996.…”

Section: Purpose Of This Studymentioning

confidence: 99%

Accounting as a management tool for non-industrial private forestry

Hyder

Lönnstedt

Penttinen

1999

Scandinavian Journal of Management

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Non-industrial private forest owners (NIPF owners) supply most of the roundwood in Scandinavia. For these owners, it is the supply of timber that provides income and return on invested capital. Owners have to decide whether to invest more in their property, or to disinvest. They have to find ways to increase revenue and cut costs. By applying business accounting practices to traditional forest accounting we propose principles for profit and loss accounts and balance sheets for NIPF owners. We argue that it is important for the forest owner to complement the strictly regulated accounting with contingent adjustments. An economic analysis of a medium-sized forest holding illustrates the importance of this type of adjustment. Research on this question can help to increase economic awareness among private owners and to support the harmonization of forestry accounting in the EU.

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Outline of accounting for non-industrial private woodlots.

Cited by 2 publications

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Portfolio management and the competitiveness of forest ownership

Portfolio management and the competitiveness of forest ownership

Accounting as a management tool for non-industrial private forestry

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