Last modified: 2017-03-13
Financial Situation of Crop and Animal Farms in Slovakia
This paper deal with financial situation of crop and animal production based on an analysis of a unique set of agricultural farms operating in Slovak Republic. Slovakia is perceived as a leader among the European countries due to its size of farms as up to 90 of the utilized agricultural land is farmed by large farms. We can observe the irregular nature of Slovak agriculture, where a minority of farms (14.98%) cultivates the majority (80.23%) of the agricultural land. In our paper farms are divided in our research to two groups (according to the share in sales of crop or animal production) and each is characterized by descriptive statistics for selected ratios of financial analysis. In the long run, crop farms are profitable and profit from crop production is used to cover the losses from animal production. 50% of animal farms with low profitability generate higher loss than the 50% of animal farms with better ROE results. Results also show, that 25% of best performing crop and animal farms are able to generate profit. . In the paper we use the evaluation of indebtness by using costs of debt capital (CoDC) with basic earning power (BEP) ratio. Costs of debt capital is relatively high. In average only 26.6% of farms satisfies the condition „BEP>CoDC“ and from these are more than 60% crop farm. For these farms we recommend to increase the debt ratio as it will increase the return on equity (ROE).
Financial situation; Agriculture; Financial analysis
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