Differences in profitability among higher debt AgFA dairy farms 2003

File(s)
Date
2006-02Author
Arnold, Elsa
Hadley, Gregg
Publisher
University of Wisconsin-River Falls
Metadata
Show full item recordAbstract
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.
Subject
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
Permanent Link
http://digital.library.wisc.edu/1793/6776Description
14 p.
Citation
Arnold, Elsa and Gregg Hadley. "The Differences in Profitability Among Higher Debt AgFA Dairy Farms 2003." Endeavor 2.1 (2006): 11-25.
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