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The Ideal Debt Ratio of an Agricultural Enterprise

Author

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  • Jiří Kučera

    (The Faculty of Operation and Economics of Transport and Communications, Department of Economics, University of Žilina, Univerzitná 8215/1, 01026 Žilina, Slovakia)

  • Marek Vochozka

    (School of Expertness and Valuation, Institute of Technology and Business in České Budějovice, Okružní 517/10, 370 01 České Budějovice, Czech Republic)

  • Zuzana Rowland

    (School of Expertness and Valuation, Institute of Technology and Business in České Budějovice, Okružní 517/10, 370 01 České Budějovice, Czech Republic)

Abstract

The objective of the contribution is to propose a new methodology for determining the optimal credit absorption capacity of an enterprise while maintaining the positive function of financial leverage, i.e., the maximum possible loan that would continuously bring benefit to the enterprise. The proposed methodology determines the credit absorption capacity of an enterprise according to EVA Equity and EVA Entity. Based on a theoretical analysis of both indicators, the possibility of applying the proposed methodology for this purpose was proved. To verify the theoretical assumptions, the optimal credit absorption capacity of enterprises operating in the agricultural sector of the CR was determined. The data used for the purposes of the contribution were obtained from the Albertina database for the years 2012–2018. The credit absorption capacity of the monitored enterprises ranged from CZK 6.88 million to CZK 9.6 million. The article also determines the optimal ratio of equity to debt capital.

Suggested Citation

  • Jiří Kučera & Marek Vochozka & Zuzana Rowland, 2021. "The Ideal Debt Ratio of an Agricultural Enterprise," Sustainability, MDPI, vol. 13(9), pages 1-17, April.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:9:p:4613-:d:540292
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    References listed on IDEAS

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    Cited by:

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    2. Gajdosikova Dominika & Valaskova Katarina, 2022. "The Impact of Firm Size on Corporate Indebtedness: A Case Study of Slovak Enterprises," Folia Oeconomica Stetinensia, Sciendo, vol. 22(1), pages 63-84, June.
    3. Muhammad Kashif Ali & Muhammad Khurram Zahoor & Asif Saeed & Safia Nosheen, 2023. "Moderating effect of vertical integration on the relationship between sustainability and performance: evidence from oil and gas energy sector," Future Business Journal, Springer, vol. 9(1), pages 1-11, December.
    4. Monika Burghauserová & Zuzana Rowland & Lenka Novotná, 2022. "Production function in agriculture in the Czech Republic," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 10(1), pages 453-466, September.
    5. Dominika Gajdosikova & Katarina Valaskova & Tomas Kliestik & Maria Kovacova, 2023. "Research on Corporate Indebtedness Determinants: A Case Study of Visegrad Group Countries," Mathematics, MDPI, vol. 11(2), pages 1-30, January.
    6. Toušek, Zdeněk & Hinke, Jana & Malinská, Barbora & Prokop, Martin, 2022. "Shareholder Value Generation within the Agro-Food Financial Supply Chain," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 14(3), September.
    7. Aneta Jarosz-Angowska & Anna Nowak & Elżbieta Kołodziej & Hanna Klikocka, 2022. "Effect of European Integration on the Competitiveness of the Agricultural Sector in New Member States (EU-13) on the Internal EU Market," Sustainability, MDPI, vol. 14(20), pages 1-23, October.

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