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Financial performance of publicly‐traded agribusinesses

Financial performance of publicly‐traded agribusinesses Purpose – Agribusinesses represent a fundamental link in connecting farmers with retailers and consumers, yet little research has been done to examine the historical financial performance of these food processing firms. This paper aims to address this issue. Design/methodology/approach – The authors' research examines how publicly‐traded agribusinesses perform financially compared to all firms over the period from 1961 to 2011. The authors utilize several indicators of company success, including financial ratios and balance sheet/income statement items, to compare agribusiness firms to all firms in the market. The authors perform the analysis over time and also for companies with low, median, and high performance. They also perform Du Pont analysis to compare return on equity components between agribusinesses and all firms. Findings – The authors find that agribusinesses outperform at the median the sample of all firms in terms of financial ratios related to profitability, liquidity, and market ratios, but have slightly lower liquidity and debt ratios. The Du Pont analysis shows that the higher return on equity for agribusinesses is mostly due to higher asset turnover ratios, indicating higher operating efficiency of agribusinesses. The strong financial performance of food manufacturing agribusinesses makes them valuable companies in an investment portfolio. Originality/value – This study provides a basic overview of financial ratios used to examine the financial performance of publicly‐traded agribusinesses. The authors' findings show that agribusinesses outperform all firms in terms of key financial indicators. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Agricultural Finance Review Emerald Publishing

Financial performance of publicly‐traded agribusinesses

Ani L. Katchova; Sierra J. Enlow
Agricultural Finance Review , Volume 73 (1): 16 – May 3, 2013
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References (27)

Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
0002-1466
DOI
10.1108/00021461311321311
Publisher site
See Article on Publisher Site

Abstract

Purpose – Agribusinesses represent a fundamental link in connecting farmers with retailers and consumers, yet little research has been done to examine the historical financial performance of these food processing firms. This paper aims to address this issue. Design/methodology/approach – The authors' research examines how publicly‐traded agribusinesses perform financially compared to all firms over the period from 1961 to 2011. The authors utilize several indicators of company success, including financial ratios and balance sheet/income statement items, to compare agribusiness firms to all firms in the market. The authors perform the analysis over time and also for companies with low, median, and high performance. They also perform Du Pont analysis to compare return on equity components between agribusinesses and all firms. Findings – The authors find that agribusinesses outperform at the median the sample of all firms in terms of financial ratios related to profitability, liquidity, and market ratios, but have slightly lower liquidity and debt ratios. The Du Pont analysis shows that the higher return on equity for agribusinesses is mostly due to higher asset turnover ratios, indicating higher operating efficiency of agribusinesses. The strong financial performance of food manufacturing agribusinesses makes them valuable companies in an investment portfolio. Originality/value – This study provides a basic overview of financial ratios used to examine the financial performance of publicly‐traded agribusinesses. The authors' findings show that agribusinesses outperform all firms in terms of key financial indicators.

Journal

Agricultural Finance Review – Emerald Publishing

Published: May 3, 2013

Keywords: Agribusinesses; Compustat; Du Pont analysis; Financial performance; Financial ratios; Farms

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