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EVA and its Determinants for Selected Groups of Farms: Conventional and Organic Farming

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  • Aulová, R.
  • Frydlova, M.

Abstract

This paper analyzes the economic value added, as well as its determining factors, for selected groups of agricultural enterprises - legal persons, farming in conventional and organic ways. The impact of the weighted average cost of capital to the value of EVA, as well as the efficient use of invested capital, including capital structure, in relation to farming, are both evaluated. The article also aims to verify the hypothesis that selected farms are able to achieve, without subsidies, particularly direct payments, positive economic value added and an efficient use of capital. The panel data set we use is drawn from the database of the Creditinfo Company Monitor, collected by Creditinfo Czech Republic, s.r.o. Specifically, we use information from the final accounts of chosen farms in the years 2006 - 2010. This paper is part of the research grant IGA 20121069, „Identification of the major determinants of the farm profits of legal persons and a determination of their specific characteristics”.

Suggested Citation

  • Aulová, R. & Frydlova, M., 2012. "EVA and its Determinants for Selected Groups of Farms: Conventional and Organic Farming," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 4(3), pages 1-11, September.
    • Handle: RePEc:ags:aolpei:146252
    DOI: 10.22004/ag.econ.146252
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    References listed on IDEAS

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    1. Alfons Oude Lansink & Ky–sti Pietola, 2002. "Effciency and productivity of conventional and organic farms in Finland 1994--1997," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 29(1), pages 51-66, March.
    2. Pederson, Glenn, 1998. "Cost of Capital for Agricultural Cooperatives," Research Reports 280007, United States Department of Agriculture, Rural Development.
    3. Biddle, Gary C. & Bowen, Robert M. & Wallace, James S., 1997. "Does EVA(R) beat earnings? Evidence on associations with stock returns and firm values," Journal of Accounting and Economics, Elsevier, vol. 24(3), pages 301-336, December.
    4. Pierru, Axel & Babusiaux, Denis, 2010. "WACC and free cash flows: A simple adjustment for capitalized interest costs," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(2), pages 240-243, May.
    5. Miller, Richard A., 2009. "The weighted average cost of capital is not quite right," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(1), pages 128-138, February.
    6. Cigola, Margherita & Peccati, Lorenzo, 2005. "On the comparison between the APV and the NPV computed via the WACC," European Journal of Operational Research, Elsevier, vol. 161(2), pages 377-385, March.
    7. Tzouvelekas, Vangelis & Pantzios, Christos J. & Fotopoulos, Christos, 2001. "Technical efficiency of alternative farming systems: the case of Greek organic and conventional olive-growing farms," Food Policy, Elsevier, vol. 26(6), pages 549-569, December.
    8. Young, David, 1997. "Economic value added: A primer for European managers," European Management Journal, Elsevier, vol. 15(4), pages 335-343, August.
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