Abstract
The paper evaluates and analyses selected financial ratios of a set of farms in Slovakia in 2017. The farms are divided into two groups (sugar beet producers and sugar beet non-producers). The data used for the analysis were obtained from the National Bank of Slovakia (NBS) over the period 2009 – 2017 and the database of the Ministry of Agriculture and Rural Development of the Slovak Republic (MARD SR). Farmers generally achieve a low level of return on equity. In the paper, we analyze the development of interest rates and measure the potential effect of financial leverage, which can increase the profitability (return on equity) of the farms. Moreover, we test the statistically significant difference of selected ratios between the group of producers and non-producers of sugar beet in Slovakia. In 2017, the return on equity of sugar beet producers in Slovakia reached lower results in comparison to sugar beet non-producers. The differences in return on equity are explained by the lower level of equity per ha and thus higher indebtedness of non-producers of sugar beet.
Highlights
Before September 30, 2017, there existed quotas for sugar beet production in the EU member states
Sugar beet is grown in our conditions only to obtain sucrose, while its cultivation contributes to the by-products of its processing as well as to certain payments in feed balances. (Bojňanská et al, 2011; Camara-Salim et al, 2021; Mujumdar, 2014)
Simulation results from a sample of Belgian sugar beet farms show that the sugar CMO reform includes different supply and income effects across farms depending on their share of out-ofquota sugar beet relative to their total beet supply and their quota rent
Summary
Before September 30, 2017, there existed quotas for sugar beet production in the EU member states. MATERIAL AND METHODOLOGY To assess the level of return on equity and indebtedness of agricultural companies in Slovakia in 2017, individual data about sugar beet producers were used. Positive leverage – if the cost of debt (interest rate on invested debt sources) is lower than the return on total capital, ROE increases as the company's indebtedness increases.
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