Operating and financial leverage as risk measures in agricultural companies

Serihiy Zabolotnyy and Mirosław Wasilewski

No 276377, Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej from Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI)

Abstract: The goal of the research is to estimate the level of risk of agricultural companies according to degree of operating and financial leverage, and to define relations between these measures and ratios of financial efficiency. The research involved companies from the database of the Institute of Agricultural and Food Economics – National Research Institute in 2005-2013. The greatest impact on risk of agricultural companies had the degree of operating leverage characterizing sensitivity of operating profit on volatility of operating revenue, regarding to cost structure. The degree of financial leverage showing the level of debt and interest paid influenced the risk of agricultural companies to a lesser extent. Agricultural companies with a high degree of total leverage had lower financial efficiency, arising from a low ability to generate operating profit.

Keywords: Agricultural Finance; Research Methods/ Statistical Methods; Risk and Uncertainty (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-agr and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iafepa:276377

DOI: 10.22004/ag.econ.276377

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