OPERATING RISK ANALYSIS FOR AGRICULTURAL INVESTMENTS
Annales Universitatis Apulensis Series Oeconomica, 2012, vol. 2, issue 14, 15
Decisions for substantiating the investments projects in agricultural sector are basedon the assessment of the business's profitability but also, of the economic risk assumed by theenterprisers. The paper presents a dynamic analysis model of the operating risk which is validatedin a case study using an example of an agricultural holding from viticulture. The appreciation ofthe economic risk is based on the Degree of operating leverage indicator, and the proposedanalysis model offers the possibilities to identify the factors which can lead to an adequatemanagement of risk. The case study presented validates the theoretical approach and highlightsthat the economic risk diminished due to modification of costs structure, flexibility of activity,variation of safety margin, sales and profit.
Keywords: operating risk; agriculture; investment; degree of operating leverage (search for similar items in EconPapers)
JEL-codes: L21 O22 Q14 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:alu:journl:v:2:y:2012:i:14:p:15
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