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An Analysis of Investment Decisions in Agribusiness

In: 16th Economic International Conference NCOE 4.0 2020

Author

Listed:
  • Ioana Moldovan (Tonea)

    („1 Decembrie 1918†University of Alba Iulia, Romania)

  • Ioana Beleiu

    (Babes-Bolyai University, Cluj-Napoca, Romania)

Abstract

Investment decisions are meant to bring more efficiency in business being a complex problem in agriculture, both for farmers and for investors and banks. The complexity of this process is also determined by several factors that influence investment decisions. Thus, in the decision taking process usually managers and investors consider the expenditure over a period, the cost of the necessary capital and the expected profitability. Based on the literature review we proposed a list of determinant factors for the investment decision, such as: the increasing incomes provided by the investment, the market size, possible constraints, personal characteristics and the farm specific factors. In the current paper we analyse the relationship between investment decisions, managerial accounting and financing needs of agricultural businesses and identifying the key parts that make managerial accounting important for the creditworthiness of the company.The example analysed in this article proves that costs are not only a base for calculating capital budgeting indicators, but they are also essential for cash flow calculation. Moreover, cash flow proves to be important for a bank's decision in financing a project when essential indicators like liquidity rate are not adequate in the analysed case.

Suggested Citation

  • Ioana Moldovan (Tonea) & Ioana Beleiu, 2020. "An Analysis of Investment Decisions in Agribusiness," Book chapters-LUMEN Proceedings, in: Carmen NÄ‚STASE (ed.), 16th Economic International Conference NCOE 4.0 2020, edition 1, volume 13, chapter 18, pages 194-205, Editura Lumen.
    • Handle: RePEc:lum:prchap:13-18
    DOI: https://doi.org/10.18662/lumproc/ncoe4.0.2020/18
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    References listed on IDEAS

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    1. Arthurton, Daniel A. & Moffitt, L. Joe & Allen, P. Geoffrey & Cox, Douglas A., 1995. "Do Farm Businesses and Big Businesses Apply Different Capital Budgeting Procedures?," Agricultural and Resource Economics Review, Cambridge University Press, vol. 24(2), pages 149-155, October.
    2. Mikaël Akimowicz & Harry Cummings & Karen Landman, 2016. "Green lights in the Greenbelt? A qualitative analysis of farm investment decision-making in peri-urban Southern Ontario," Post-Print hal-01299322, HAL.
    3. Štefan Bojnec & Laure Latruffe, 2011. "Financing Availability and Investment Decisions of Slovenian Farms During the Transition to a Market Economy," Journal of Applied Economics, Taylor & Francis Journals, vol. 14(2), pages 297-317, November.
    4. Savić, Bojan & Vasiljević, Zorica & Đorđević, Dragan, 2014. "Strategic Cost Management As Instrument For Improving Competitiveness Of Agribusiness Complex," Economics of Agriculture, Institute of Agricultural Economics, vol. 61(4), pages 1-16, December.
    5. Aramyan, Lusine H. & Lansink, Alfons G.J.M. Oude & Verstegen, Jos A.A.M., 2007. "Factors underlying the investment decision in energy-saving systems in Dutch horticulture," Agricultural Systems, Elsevier, vol. 94(2), pages 520-527, May.
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    More about this item

    Keywords

    Investment decision; creditworthiness; agriculture;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • F1 - International Economics - - Trade
    • F3 - International Economics - - International Finance
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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