IDEAS home Printed from https://ideas.repec.org/a/eme/afrpps/v72y2012i2p262-272.html
   My bibliography  Save this article

Financial ratio analysis using ARMS data

Author

Listed:
  • Bruce L. Ahrendsen
  • Ani L. Katchova

Abstract

Purpose - The purpose of this research is to evaluate the financial performance measures calculated and reported by the Economic Resource Service (ERS) from Agricultural Resource Management Survey (ARMS) data. The evaluation includes the calculation method and the underlying assumptions used in obtaining the reported values. Recommendations for improving the information reported are proposed to ERS. Design/methodology/approach - The financial measures calculated and reported are compared with those recommended by the Farm Financial Standards Council (FFSC). The underlying assumptions are identified by analyzing the software code used in calculating the values reported. The values reported by ERS are duplicated and alternative methods for calculating the financial performance measures are considered. The values obtained from the various calculation methods are compared and contrasted. Findings - Recommendations for ERS include: calculate and report the financial measures recommended by FFSC, note values that are imputed, periodically update and validate assumptions used in calculating imputed values, review its policy for flagging estimates as statistically unreliable, report medians and other select percentiles, and consider reporting the percent of farm businesses that have values within critical zones. Originality/value - A total of four methods for calculating financial performance measures are compared and contrasted. These are the aggregate mean, sample mean, sample median, and percentage of farm businesses with values in critical zones.

Suggested Citation

  • Bruce L. Ahrendsen & Ani L. Katchova, 2012. "Financial ratio analysis using ARMS data," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(2), pages 262-272, July.
    • Handle: RePEc:eme:afrpps:v:72:y:2012:i:2:p:262-272
    DOI: 10.1108/00021461211250492
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/00021461211250492/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/00021461211250492/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/00021461211250492?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jaclyn D. Kropp & Ani L. Katchova, 2011. "The effects of direct payments on liquidity and repayment capacity of beginning farmers," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 71(3), pages 347-365, November.
    2. Katchova, Ani L., 2010. "An Analysis of the Financial Performance of Beginning Farmers," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61513, Agricultural and Applied Economics Association.
    3. Adhikari, Arun & Mishra, Ashok K. & Chintawar, Sachin, 2009. "Adoption of Technology and Its Impact on Profitability of Young and Beginning Farmers: A Quantile Regression Approach," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46830, Southern Agricultural Economics Association.
    4. repec:eme:afrpps:v:67:y:2007:i:1:p:35-53 is not listed on IDEAS
    5. Chavez, Eddie C. & Dixon, Bruce L. & Ahendsen, Bruce L. & Wailes, Eric J., 2009. "Comparative Financial Characteristics of U.S. Farms by Type, 2005," Staff Papers 55780, University of Arkansas, Department of Agricultural Economics and Agribusiness.
    6. D'Antoni, Jeremy M. & Mishra, Ashok K. & Chintawar, Sachin, 2009. "Predicting Financial Stress in Young and Beginning Farmers in the United States," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46861, Southern Agricultural Economics Association.
    7. repec:eme:afrpps:v:69:y:2009:i:2:p:160-179 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:eme:afrpps:v:72:y:2012:i:2:p:247-253 is not listed on IDEAS
    2. Todd, Jessica E. & Whitt, Christine & Key, Nigel & Mandalay, Okkar, 2024. "An Overview of Farms Operated by Socially Disadvantaged, Women, and Limited Resource Farmers and Ranchers in the United States," Economic Information Bulletin 340512, United States Department of Agriculture, Economic Research Service.
    3. Soliwoda, Michał, 2016. "How to Improve a Farm Financial Management? The Lesson from Poland," Rural Areas and Development, European Rural Development Network (ERDN), vol. 13, pages 1-12.
    4. Alexander Zorn & Michele Esteves & Ivo Baur & Markus Lips, 2018. "Financial Ratios as Indicators of Economic Sustainability: A Quantitative Analysis for Swiss Dairy Farms," Sustainability, MDPI, vol. 10(8), pages 1-20, August.
    5. Hisham S. El-Osta, 2018. "Strategies to Manage Risk and their Role in Impacting Economic Performance among Farm Households," Applied Economics and Finance, Redfame publishing, vol. 5(2), pages 49-64, March.
    6. Hoppe, Robert A., 2014. "Structure and Finances of U.S. Farms: Family Farm Report, 2014 Edition," Economic Information Bulletin 262118, United States Department of Agriculture, Economic Research Service.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jaclyn D. Kropp & Ani L. Katchova, 2011. "The effects of direct payments on liquidity and repayment capacity of beginning farmers," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 71(3), pages 347-365, November.
    2. Williamson, James M. & Katchova, Ani L., 2013. "Tax-Exempt Bond Financing for Beginning and Low-Equity Farmers: The Case of ‘Aggie Bonds’," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 45(3), pages 485-496, August.
    3. Goeringer, L. Paul & Goodwin, Harold L., Jr. & Dixon, Bruce L. & Popp, Michael P., 2013. "EnVesting in an Agricultural Legacy: Design and Implementation of a Targeted Young and Beginning Farmer Loan Program in Arkansas," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143037, Southern Agricultural Economics Association.
    4. Katchova, Ani L. & Ahearn, Mary Clare, 2014. "Farmland Ownership and Leasing: Implications for Young and Beginning Farmers," Staff Papers 184725, University of Kentucky, Department of Agricultural Economics.
    5. Weir, Rebecca & Hadrich, Joleen & Jablonski, Becca & Bauman, Allie, 2022. "Financial performance of beginning dairy farmers in Minnesota," Staff Papers 329376, University of Minnesota, Department of Applied Economics.
    6. Katchova, Ani & Ahearn, Mary, 2015. "Farmland Assets and Growth Trends for Young and Beginning Farmers in the U.S," 2015 Conference, August 9-14, 2015, Milan, Italy 211839, International Association of Agricultural Economists.
    7. Ani L. Katchova & Mary Clare Ahearn, 2016. "Dynamics of Farmland Ownership and Leasing: Implications for Young and Beginning Farmers," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(2), pages 334-350.
    8. Balezentis, Tomas & Ribasauskiene, Erika & Morkunas, Mangirdas & Volkov, Artiom & Streimikiene, Dalia & Toma, Pierluigi, 2020. "Young farmers’ support under the Common Agricultural Policy and sustainability of rural regions: Evidence from Lithuania," Land Use Policy, Elsevier, vol. 94(C).
    9. Giri, Anil K & Litkowski, Carrie & Subedi, Dipak & McDonald, Tia, 2022. "COVID-19 Working Paper: Farm Sector Financial Ratios: Pre-COVID Forecasts and Pandemic Performance for 2020," Administrative Publications 327332, United States Department of Agriculture, Economic Research Service.
    10. Giri, Anil K. & Litkowski, Carrie & Subedi, Dipak & McDonald, Tia, 2022. "COVID-19 Working Paper: Farm Sector Financial Ratios: Pre-COVID Forecasts and Pandemic Performance for 2020," USDA Miscellaneous 327371, United States Department of Agriculture.
    11. Soliwoda, Michał, 2014. "Bezpieczeństwo Finansowe Gospodarstw Rolniczych W Polsce Z Perspektywy Wspólnej Polityki Rolnej," Village and Agriculture (Wieś i Rolnictwo), Polish Academy of Sciences (IRWiR PAN), Institute of Rural and Agricultural Development, vol. 3(164).
    12. Wheeler, Sarah Ann & Zuo, Alec & Bjornlund, Henning, 2014. "Investigating the delayed on-farm consequences of selling water entitlements in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 145(C), pages 72-82.
    13. Denis Nadolnyak & Valentina Hartarska & Bretford Griffin, 2019. "The Impacts of Economic, Demographic, and Weather Factors on the Exit of Beginning Farmers in the United States," Sustainability, MDPI, vol. 11(16), pages 1-17, August.
    14. Katchova, Ani L., 2010. "Structural changes in U.S. agriculture: Financial performance of farms in transition," 114th Seminar, April 15-16, 2010, Berlin, Germany 60965, European Association of Agricultural Economists.
    15. Collins-Sowah, Peron A. & Adjin, K. Christophe & Henning, Christian H. C. A., 2019. "Complementary impact of social capital on the adoption of productivity enhancing technologies: Evidence from Senegal," Working Papers of Agricultural Policy WP2019-03, University of Kiel, Department of Agricultural Economics, Chair of Agricultural Policy.
    16. Jan Zwolak, 2018. "Sold Commercial Production and Its Financial Security in Polish Agriculture," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 141-151.
    17. Iotti, Mattia, 2023. "Financial evaluation and credit access of agricultural firms," Economia agro-alimentare / Food Economy, Italian Society of Agri-food Economics/Società Italiana di Economia Agro-Alimentare (SIEA), vol. 25(2), October.
    18. Hisham S. El-Osta, 2016. "Farmland Ownership and Its Impact on the Debt Servicing Capacity Among U.S. Married-Couple Farm Households," Applied Economics and Finance, Redfame publishing, vol. 3(4), pages 190-206, November.
    19. Mattia Iotti & Giuseppe Bonazzi, 2023. "Financial Sustainability in Agri-Food Companies: The Case of Members of the PDO Parma Ham Consortium," Sustainability, MDPI, vol. 15(5), pages 1-31, February.
    20. Mattia Iotti, 2023. "Financial evaluation and credit access of agricultural firms," Economia agro-alimentare, FrancoAngeli Editore, vol. 25(2), pages 31-67.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:afrpps:v:72:y:2012:i:2:p:262-272. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.