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Analysis Of Working Capital Efficiency For Arable Crop Farms In Hungary

Author

Listed:
  • Szabolcs MAKAI

    (University of Debrecen, Faculty of Economics, Ihrig Károly Doctoral School, Hungary)

  • Vilmos LAKATOS

    (University of Debrecen, Faculty of Economics, Institute of Accounting and Finance, Hungary)

Abstract

Our study is a thematic analysis of the literature on working capital, aiming to present the latest research and interpretations on working capital management. In the second part of the paper, we present an assessment of capital adequacy and working capital efficiency and their results, based on our own data collection and compared with the findings of the literature. There is a substantial international literature on the impact of working capital, which examines the returns and the impact on profitability of the stock of inventories, the turnover of various current assets and the cycle days associated with working capital management. In our study, we used these aspects to select asset endowment and turnover-income profitability indicators from the EMIS database for Hungarian arable crop farms, searching for correlations by regression analysis for three years 2018, 2020 and 2022. Our results show that working capital endowment specifically showed significant correlations with operating revenue in all three years, while the other explanatory variables mostly gave significant correlations only for the year 2022. The size of the Hungarian agricultural economy is specifically characterised by micro and small enterprises, therefore we categorised the enterprises into micro, small, medium and large enterprises based on the value of their assets and their revenue. The number of enterprises specifically engaged in cereal and oilseed production by size category thus differed significantly, and multivariate regression was no longer possible for the two larger categories. In these cases, correlation analysis preceded regression analysis. Examining working capital efficiency by firm size, small farms showed significant correlations with profitability, but they also tended to do so only for the year 2022.

Suggested Citation

  • Szabolcs MAKAI & Vilmos LAKATOS, 2024. "Analysis Of Working Capital Efficiency For Arable Crop Farms In Hungary," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 33(1), pages 93-103, July.
    • Handle: RePEc:ora:journl:v:33:y:2024:i:1:p:93-103
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    References listed on IDEAS

    as
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    2. Ding, Sai & Guariglia, Alessandra & Knight, John, 2013. "Investment and financing constraints in China: Does working capital management make a difference?," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1490-1507.
    3. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3‐4), pages 573-588, April.
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    5. Adina Elena Dănuleţiu, 2010. "Working Capital Management And Profitability: A Case Of Alba County Companies," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(12), pages 1-36.
    6. Matthew D. Hill & G. Wayne Kelly & Michael J. Highfield, 2010. "Net Operating Working Capital Behavior: A First Look," Financial Management, Financial Management Association International, vol. 39(2), pages 783-805, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    asset value; working capital; profitability; regression analysis; different sizes of firms;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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