The Ideal Debt Ratio of an Agricultural Enterprise

Abstract

The objective of the contribution is to propose a new methodology for determining the optimal credit absorption capacity of an enterprise while maintaining the positive function of financial leverage, i.e., the maximum possible loan that would continuously bring benefit to the enterprise. The proposed methodology determines the credit absorption capacity of an enterprise according to EVA Equity and EVA Entity. Based on a theoretical analysis of both indicators, the possibility of applying the proposed methodology for this purpose was proved. To verify the theoretical assumptions, the optimal credit absorption capacity of enterprises operating in the agricultural sector of the CR was determined. The data used for the purposes of the contribution were obtained from the Albertina database for the years 2012–2018. The credit absorption capacity of the monitored enterprises ranged from CZK 6.88 million to CZK 9.6 million. The article also determines the optimal ratio of equity to debt capital.

Effect of European Integration on the Competitiveness of the Agricultural Sector in New Member States (EU-13) on the Internal EU Market

“…In their opinion, the development of a country and growth in its citizens' welfare can be based on the maximisation of the benefits of international trade in the long term [22,23]. When building a strong international position to achieve the objectives of economic development, the following should be taken into account: identification and promotion of "sectors of the future" in industrial policy [24], development of human resources [25], access to knowledge, technology skills [26,27], institutional conditions [28][29][30], availability of financing [31,32], ability of adapting to changing external conditions [33], and increased efficiency of using production factors and notably intangible resources [34][35][36][37]. Transformation within the international division of labour and progressing globalisation of the world economy make respective countries adapt their structure.…”

“…Transformation within the international division of labour and progressing globalisation of the world economy make respective countries adapt their structure. The role of external, international conditions, including global competition and financial markets, in shaping the dynamics of economic development and sustainability is growing [31]. In the environment of free flow of production factors, competitive struggle is manifested as competition for the capital, know-how, managerial and organisational skills, and specialists [36,37].…”

“…Competitiveness of the whole economy or its sector is a result of complex and dynamic interaction between three elements: the competitive potential-mostly related to the availability of resources or production factors, the competitive position-that is, the outcomes of competitive activity, and the management processes-defined as the optimum operation and use of the available potential to achieve a specific competitive position [45]. Many authors [31,36,41] underline that it is essential to make a clear distinction between the international competitive capacity (competitive potential) of the economy and its competitive position (outcome competitiveness). The competitive potential of the economy is the competitive capacity and is dynamic.…”

Production function in agriculture in the Czech Republic

“…Based on the results, it is possible to examine the economic growth (Bartoš et al, 2021, Cheng & Liu, 2021. Production function is an important tool for the analysis, evaluation and prediction of production processes (Kučera et al, 2021, Gadzhieva et al, 2019. The issue of production functions in general and in the industrial sector is also addressed by Straková et al (2020Straková et al ( , 2021.…”

Methods for risk premium: Application for agriculture companies in Czech Republic

“…In the event that the company fails to merge and is already in a worse capital condition, this period can be overcome through a loan. Kučera et al (2021) dealt with the determination of the optimal debt level of an average agricultural enterprise in the Czech Republic using the difference in the values of the EVA indicators (EVA Entity, EVA Equity). If a company is operating in an economically unstable market it may be exposed to business risk (Çera et al, 2019).…”