Naslov
Potential for using financial leverage to increase profitability - case of agriculture companies in Croatia

Autori
Brozović, Mateja

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
Proceedings of the 30th International Scientific Conference "Agrarian Perspectives XXX. - Sources of competitiveness under pandemic and environmental shocks" / Tomšik, Karel - Prag : Czech University of Life Sciences Prague (CZU), 2021, 37-47

ISBN
978-80-213-3129-7

Skup
30th International conference "Agrarian perspectives XXX. - Sources of Competitiveness under Pandemic and Environmental Shocks"

Mjesto i datum
Prag, Češka Republika, 15.09.2021. - 16.09.2021

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
agriculture companies ; Croatia ; financial leverage ; profitability ; return on assets ; return on equity

Sažetak
The coronavirus pandemic has emphasized the strategic importance of the domestic agriculture sector, by disrupting the usual food chains and forcing countries to turn to domestic producers. Croatia has a great potential, but issues such as the size of farms, land ownership and lack of financing opportunities have led to a constant increase in imports of agricultural products and decrease in the percentage of cultivated land. The focus of this paper is on financing opportunities of agriculture companies in Croatia. Companies can benefit from using financial leverage if they have high enough return on assets to be able to borrow funds at interest rates that are lower than return on assets. Successful using of financial leverage will result in increasing return on equity above the level of return on assets. The main objectives of the paper are to investigate: 1) the level of profitability of agriculture companies in Croatia, 2) if companies are successful at using financial leverage, 3) if the size of the company is an important factor when it comes to using financial leverage, 4) if there is a difference between the potential of agriculture companies to use financial leverage when compared to other non-financial sectors. By analyzing the period 2015-2019, research results showed that a certain number of agricultural companies in Croatia is limited from expanding their operations due to low profitability and unfavorable borrowing. A positive aspect is that small agriculture companies are generally not in a disadvantage when compared to medium and large companies. However, a negative aspect is that companies from other non-financial sectors are in a more favorable position due to higher return on assets, making it easier for them to use financial leverage successfully.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA