Tomato Processing Firms’ Management: A Comparative Application of Economic and Financial Analyses

Abstract

In Italy, the territory that includes the Emilia-Romagna region, the southern areas of Lombardia and some of Piemonte's territory is a center of national importance for tomato production and transformation. The processing firms operating in this area are characterized by significant investments in fixed assets and working capital. The article analyzes the annual account data of a sample of firms, showing that economic margins traditionally applied to assess the sustainability of the business cycle differ significantly from financial margins; also, the Interest Coverage Ratios (ICRs) differ if calculated by applying an economic or a financial approach. Moreover, the annual account data highlight difficult credit access, expressed by applying a multiple regression model to analyze Free Cash Flow to Equity (FCFE) generation. The article suggests a useful metric to measure more correctly the sustainability of a firm's management that could be applied to others in the agri-food sector, particularly if characterized by a capital-intensive processing cycle.

Economic Sustainability of Italian Greenhouse Cherry Tomato

“…Therefore, considering the difficulties that farms have in being competitive (high production costs, low negotiation power, small farm size), process innovation [75,76], and the aggregation of productive supply via forms of farmer association, could represent ways of improving profit margins [77][78][79][80][81]. The above highlights how a modernization and restructuring of the supply chain and a change of entrepreneurial strategies of farmers [82] appear necessary so as to favor a more sustainable economic development of farms [83][84][85].…”

Economic and Financial Comparison between Organic and Conventional Farming in Sicilian Lemon Orchards

“…The surveyed farm was chosen in function of work objectives, as well as in other studies [40,41], and it is representative of organic farms present in the area. Data have been collected by means of a face-to-face questionnaire directly administered to the farmer [42,43].…”

Profitability and Financial Sustainability Analysis in Italian Aquaculture Firms by Application of Economic and Financial Margins

“…The joint application of the economic and financial approach for the assessment of affordability and sustainability management can also give significantly different results between the two approaches, as demonstrated for other sectors by several studies (Greenberg et al, 1986;Kwon, 1989;Dechow, 1994;Russell, 2009;Iotti and Bonazzi, 2014b;Sgroi et al, 2015). This situation occurs particularly in SMEs characterized by absorption of working capital (Glancey, 1998;Kieschnick et al, 2008).…”