The Likelihood of Farms Bankruptcy: The Case of Lithuanian Family Farms

Abstract

In developing the measures of agriculture policy and purposeful usage of EU funds, also for financial organisations, farmers, advisors and scientists it is important to predict farm bankruptcy.

The Impacts of CAP Subsidies on the Financial Risk and Resilience of Hungarian Farms, 2014–2021

“…This means that the liquidity position of analyzed farms was about the same as those found by Wolf et al in the USA for 2010-2019, ranging from 2.05 to 3.26. The net working capital ratio (WCA) ranged from negative values (non-subsidized micro and medium-sized farms) to 0.26, which was similar to the findings of Jedik and Stalgien ė (2018) for Lithuanian farms.…”

“…Our results showed that all of our farms were vulnerable throughout the 2014-2021 period in terms of OPM (in the range of 0.01-0.11), but quite strong according to ATR (0.77-1.66). Wolf reported somewhat better performance of US dairy farms for OPM (0.03 to 0.20), but Jedik and Stalgien ė (2018) reported weaker ATR values for Lithuanian farms (0.13-0.35 between 2014 and 2016). Stulpinien ė and Aleknevičien ė (2012) reported that for Lithuanian farms in 2010, ROA and ROE values were negative (−0.065 to −0.004), except that farm with more than 150 ha of land had 0.022 and 0.028 for ROA and ROE, respectively.…”

“…Financial analysis is usually based on the balance sheet and the profit-and-loss account (income statement) of the business. The financial health is evaluated according to financial indicators of liquidity, solvency, profitability, and efficiency, each of which has several widely used indicators, as listed below (Vavrek et al 2021;Myšková and Hájek 2017;Jedik and Stalgien ė 2018;Wolf and Karszes 2023;Boda and Úradníček 2019;Brand et al 2022):…”

“…A weak financial position can easily lead to bankruptcy, which affects food supplies, food prices, and the employment situation. Therefore, assessing the resilience or vulnerability of agricultural enterprises is important not only for the farming community, but for consumers, farm labor, and eventually society as a whole (Vavrek et al 2021;Polukhin and Panarina 2022;Wolf and Karszes 2023;Jedik and Stalgien ė 2018).…”

Evaluating the Financial Health of Agricultural Enterprises in the Conditions of the Slovak Republic Using Bankruptcy Models

“…Their relevance is also documented by several modifications, such as the Altman model [34][35][36]. Predicting the financial situation of agricultural companies using multidimensional discriminatory analysis has been the subject of several studies with confrontational results (e.g., Karpáč and Bartošová [25]; Bod'a and Úradníček [37]; Jedik and Stalgiene [38]; Karas et al [39]; Valašková et al [27]; Rajin et al [40]; Kiaupaite-Grushniene [2]; Popescu [41]).…”