Non-Traditional Methods for Assessing the Financial Situation of a Farm

Abstract

The main objective of assessing a company’s financial state is predicting its future development. In agriculture, failure factors differ from other industries, including high debt and interest rates, lower profitability during recessions, and environmental impacts like droughts and floods. To ensure market survival, modern management of agricultural enterprises is crucial. Business analysis generates data for this. A financially healthy enterprise is profitable, efficiently uses capital, and repays obligations on time. Various methods measure financial performance, chosen based on time frame, purpose, data nature, and sources. Complex measurements should be balanced. Financial issues arise from internal and external factors, often due to environmental changes. In agriculture, understanding success factors is vital for long-term survival as food demand increases. Failure factors are diverse, spanning economic (profitability, liquidity) and non-economic (planning, decision-making). Mismanagement and external factors can lead to farm failure. In this changing environment, success requires future-focused financial development, making retrospective analysis insufficient. Predictive models tailored to each country's specifics are essential for agricultural sustainability. This study explores such models and their relevance for agricultural financial sustainability.