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Farm Corporations: A Financial Analysis

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  • Coffman, George

Abstract

In 1968, of the total of 3.1 million farm tax returns filed, only 20,000 were from farm corporations. Even this small number represents an increase, but most of this increase is in corporations using the subchapter S option. These are closely held corporations, taxed like partnerships. Farm corporations as a group tended to have more losses and lower returns, with greater variability than certain other corporate industries. The 1963-68 average rate of earning on assets (cost or acquisition value) was 4.5 percent and the rate of return on equity was 5.3 percent. Farm corporations had moderate financial strength. Equity capital was 39 percent of the total. More than half of the assets of farm corporations were invested in land and depreciable assets. The slow turnover rate on these assets and low profit margin on receipts contributed to the low returns on assets and equity. In 1968, farm corporations averaged $317,000 in assets, produced $260,000 in receipts, and earned $17,000 net income.

Suggested Citation

  • Coffman, George, 1973. "Farm Corporations: A Financial Analysis," Agricultural Economic Reports 307484, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerser:307484
    DOI: 10.22004/ag.econ.307484
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    File URL: https://ageconsearch.umn.edu/record/307484/files/aer241.pdf
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    References listed on IDEAS

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    1. Evans, Carson D. & Johnson, Bruce B. & Smith, Alan G. & Warren, Forest G., 1970. "The Balance Sheet of the Farming Sector 1969," Agricultural Information Bulletins 305794, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Raup, Philip M., 1975. "Nature And Extent Of The Expansion Of Corporations In American Agriculture," Staff Papers 13335, University of Minnesota, Department of Applied Economics.

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