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Differences in profitability among higher debt AgFA dairy farms 2003

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Author(s)
Arnold, Elsa; Hadley, Gregg
Publisher
University of Wisconsin-River Falls
Citation
Arnold, Elsa and Gregg Hadley. "The Differences in Profitability Among Higher Debt AgFA Dairy Farms 2003." Endeavor 2.1 (2006): 11-25.
Date
Feb 2006
Subject(s)
Milk prices; Dairy farms; Dairy farms and financial performance; Dairy farms and debt; Agriculture--United States--Finance; Dairy farms and profitability; Dairying--Economic aspects; Debt; Rate of return on assets
Abstract
Debt can be an effective tool to improve dairy farm businesses? profitability. Over time, farmers and lenders perceptions of acceptable debt loads have changed. In today?s dairy business expansions, it is not uncommon to see farms with >70% debt compared to asset values. This study evaluates ROROA (rate of return on assets) on a subset of high-debt farms defined as those with a debt-to-asset ratio greater than 0.4 or 40% debt. Key significant differences were pinpointed between high and low profit farms within this subset. One of these was the asset turnover ratio. Higher milk prices and more efficient asset utilization were key factors in the profitability of the high-profit farms.
Description
14 p.
Permanent link
http://digital.library.wisc.edu/1793/6776 
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