European benchmarking of determinants of profitability for companies with accrual accounting in the agricultural sector
In this study, differences in common measures of profitability, such as return on sales, return on capital employed and return on equity, are analysed in agricultural firms with accrual accounting in 10 European countries. The resulting differences in profitability are broken down using an additive decomposition method, which addresses the quantified impact of several affecting factors. This approach is based on a ratio system, which follows the principles of the DuPont identity. According to the general intention of benchmarking, the leading country within the sample for each measure of profitability provides the relevant reference point, representing best practice. This approach provides insight into the specific comparative strengths and weaknesses of the agribusinesses in the countries within the sample and indicates useful starting points for effective improvements. In addition to the value-creating operations, this involves, in particular, labour productivity, the efficient use of fixed assets and the degree of debt financing.
Ang B., Zhang F. (2000): A survey of index decomposition analysis in energy and environmental studies. Energy, 25: 1149–1176. https://doi.org/10.1016/S0360-5442(00)00039-6
BACH (2020): Bank for the Accounts of Companies Harmonized Database [Dataset]. Available at https://www.bach.banque-france.fr/?lang=en (accessed Jan 10, 2020).
BACH Working Group (2018): BACH User Guide Summary. Available at https://www.bach.banque-france.fr/?page=documentation (accessed Jan 10, 2020).
Balezentis T., Galnaityte A., Krisciukaitiene I., Namiotko V.,
Novickyte L., Streimikiene D., Melnikiene R. (2019): Decomposing dynamics in the farm profitability: an application of index decomposition analysis to Lithuanian FADN sample. Sustainability, 11: 2861. https://doi.org/10.3390/su11102861
Beyer D., Hinke J. (2018): Sectoral analysis of the differences in profitability of Czech and German business ventures: an empirical benchmark study. E+M Ekonomie a Management, 21: 127−143. https://doi.org/10.15240/tul/001/2018-1-009
Bhimani A., Horngren C.T., Datar S., Rajan M. (2012): Management and Cost Accounting. Harlow, Prentice Hall.
Bunea O., Corbos R., Popescu R. (2019): Influence of some financial indicators on return on equity ratio in the Romanian energy sector: a competitive approach using a DuPont-based analysis. Energy, 189: 116251. https://doi.org/10.1016/j.energy.2019.116251
Burja V., Marginean R. (2014): The study of factors that may influence the performance by the Dupont analysis in the furniture industry. Procedia Economics and Finance, 16: 213–223. https://doi.org/10.1016/S2212-5671(14)00794-1
Camp R. (1989): Benchmarking. Milwaukee, ASQC Quality Press.
Chandrapala P., Knapkova A. (2013): Firm-specific factors and financial performance of firms in the Czech Republic. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 61: 2183–2190. https://doi.org/10.11118/actaun201361072183
Deloof M. (2003): Does working capital management affect profitability of Belgian firms. Journal of Business Finance and Accounting, 30: 573–588. https://doi.org/10.1111/1468-5957.00008
EBA (2012): Assessment of SME proposals for CRD IV/CRR.
Available at http://www.eba.europa.eu/documents/10180/16148/EBA-SME-Report.pdf (accessed Jan 24, 2020).
ECB (2015): The Bank for the Accounts of Companies Harmonised (BACH) Database. Statistics Paper Series. Available at https://www.ecb.europa.eu/pub/pdf/scpsps/ecbsp11.en.pdf (accessed Aug 8, 2020).
EC (2015): EU Agriculture Spending. Belgium. Available at https://ec.europa.eu/agriculture/sites/agriculture/files/cap-funding/pdf/cap-spending-09-2015_en.pdf (accessed Jan 27, 2020).
EU (2018): Agriculture, Forestry and Fishery Statistics. Statisctical Books. Belgium. Available at https://ec.europa.eu/eurostat/documents/3217494/9455154/KS-FK-18-001-EN-N.pdf/a9ddd7db-c40c-48c9-8ed5-a8a90f4faa3f (accessed Jan 24, 2020).
Eurostat (2008): NACE Rev. 2 – Statistical Classification of Economic Activities in the European Community. Available at http://ec.europa.eu/eurostat/documents/3859598/5902521/KS-RA-07-015-EN.PDF (accessed Jan 24, 2020).
Eurostat (2020): European Statistical Database [Dataset]. Eurostat. Available at https://ec.europa.eu/eurostat/data/database (accessed Aug 18, 2020).
Gołaś Z. (2020): Impact of working capital management on business profitability: Evidence from the Polish dairy industry. Agricultural Economics, 66: 278–285.
Heinemann F., Overesch M., Rincke J. (2010): Rate-cutting tax reforms and corporate tax competition in Europe. Economics & Politics, 22: 498–518.
Hoekstraa R., van der Bergh J. (2003): Comparing structural and index decomposition analysis. Energy Economics, 25: 39–64. https://doi.org/10.1016/S0140-9883(02)00059-2
Hossain M. (2017): Value added statement: a part of social responsibility reporting. Journal of Finance and Accounting, 5: 74–79. https://doi.org/10.11648/j.jfa.20170502.11
Jarrar Y., Zairi M. (2001). Future trends in benchmarking for competitive advantage: a global survey. Total Quality Management, 12: 906–912. https://doi.org/10.1080/09544120100000014
Katchova A., Enlow S. (2013). Financial performance of publicly traded agribusinesses. Agricultural Finance Review, 73: 58–73. https://doi.org/10.1108/00021461311321311
Lesáková L., Ondrušová A., Vinczeová M. (2019): Factors determining profitability of small and medium enterprises in selected industry of mechanical engineering in the Slovak Republic: the empirical study. E+M Ekonomie a Management, 22: 144–160. https://doi.org/10.15240/tul/001/2019-2-010
Mijic K., Jaksic D. (2017): The determinants of agricultural industry profitability: evidence from southeast Europe. Custos e Agronegocio, 17: 154−173.
Mishra A., Harris J., Erickson K., Hallahan C., Detre J. (2012): Drivers of agricultural profitability in the USA. Agricultural Finance Review, 72: 325−340. https://doi.org/10.1108/00021461211277213
OECD (2020): Statutory Corporate Income Tax Rates. Available at https://stats.oecd.org/Index.aspx?DataSetCode=CTS_CIT (accessed Jan 11, 2020).
Samo A., Murad H. (2019): Impact of liquidity and financial leverage on firm's profitability: an empirical analysis of the textile industry of Pakistan. Research Journal of Textile and Apparel, 23: 291–305. https://doi.org/10.1108/RJTA-09-2018-0055
Weidman S., McFarland D., Meric G., Meric I. (2019): Determinants of return-on-equity in USA, German and Japanese manufacturing firms. Managerial Finance, 45: 445–451. https://doi.org/10.1108/MF-07-2018-0305
Wilson R., Charry A., Kemp D. (2005): Performance indicators and benchmarking in Australian agriculture. Extension Farming Systems Journal, 1: 45–57.