An Analysis of Investment Decisions in Agribusiness

Ioana Moldovan (Tonea) (ioana.moldovan@gmail.com) and Ioana Beleiu (ioana.beleiu@econ.ubbcluj.ro)
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Ioana Moldovan (Tonea): „1 Decembrie 1918†University of Alba Iulia, Romania
Ioana Beleiu: Babes-Bolyai University, Cluj-Napoca, Romania

Chapter 18 in 16th Economic International Conference NCOE 4.0 2020, 2020, vol. 13, pp 194-205 from Editura Lumen

Abstract: Investment decisions are meant to bring more efficiency in business being a complex problem in agriculture, both for farmers and for investors and banks. The complexity of this process is also determined by several factors that influence investment decisions. Thus, in the decision taking process usually managers and investors consider the expenditure over a period, the cost of the necessary capital and the expected profitability. Based on the literature review we proposed a list of determinant factors for the investment decision, such as: the increasing incomes provided by the investment, the market size, possible constraints, personal characteristics and the farm specific factors. In the current paper we analyse the relationship between investment decisions, managerial accounting and financing needs of agricultural businesses and identifying the key parts that make managerial accounting important for the creditworthiness of the company.The example analysed in this article proves that costs are not only a base for calculating capital budgeting indicators, but they are also essential for cash flow calculation. Moreover, cash flow proves to be important for a bank's decision in financing a project when essential indicators like liquidity rate are not adequate in the analysed case.

Keywords: Investment decision; creditworthiness; agriculture (search for similar items in EconPapers)
JEL-codes: A1 F1 F3 M1 O3 R1 (search for similar items in EconPapers)
Date: 2020
ISBN: 978-1-910129-27-2
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Persistent link: https://EconPapers.repec.org/RePEc:lum:prchap:13-18

DOI: 10.18662/lumproc/ncoe4.0.2020/18

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