The Debt Ratio and Risk

Soren Svendsen

No 24384, 14th Congress, Perth, Western Australia, August 10-15, 2003 from International Farm Management Association

Abstract: The agricultural development has caused still bigger and more expensive farms in Denmark. The debt ratio therefore has increased and has become a severe problem for the farmer. The magnitude of the debt ratio is the highest in Europe. The objective of this study is to analyse the possibility to optimise the debt ratio. In order to analyse the debt ratio 1200 financial statements have been investigated. The study confirms that it is impossible to optimise the debt ratio in line with Modigliani & Miller. On the other hand the study points out an inoptimal range, which is in accordance with the 'Trade-off Theory of Capital Structure'. That is on the high end of the scale. Finally the study demonstrates a significant correlation between the debt ratio and the financial risk.

Keywords: Agricultural Finance; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 7
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/24384/files/cp03sv01.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:ifma03:24384

DOI: 10.22004/ag.econ.24384

Access Statistics for this paper

More papers in 14th Congress, Perth, Western Australia, August 10-15, 2003 from International Farm Management Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().