Analysis of Selected Profitability Ratios in the Agricultural Sector

Renata AulováLudmila PánkováLenka Rumánková

DOI 10.7160/aol.2019.110301
No 3/2019, September
pp. 3-12

Aulová, R., Pánková, L. and Rumánková, L. (2019) "Analysis of Selected Profitability Ratios in the Agricultural Sector", AGRIS on-line Papers in Economics and Informatics, Vol. 11, No. 3, pp. 3-12. ISSN 1804-1930. DOI 10.7160/aol.2019.110301.

Abstract

The paper deals with the analysis of selected profitability indicators of Czech agricultural businesses of legal entities and their subcomponents, based on DuPont analysis. The effect of asset turnover ratio, net profit margin ratio and equity multiplier on the value of return on equity (ROE) and return on assets (ROA) is studied in relation to the legal form and size group. The analysis of the effect of sub-indicators is performed by way of a correlation analysis. Furthermore, the assumption about the influence of sub-components indicators on synthetic profitability ratios is verified. The panel data set we used was obtained from the Amadeus database. The analytical section is based upon accounting statements of agricultural businesses of legal entities in the Czech Republic within the period of 2011 – 2015. The analysis is based on the calculated values of ROA and ROE, including partial values of the sub-components indicator, by using DuPont analysis. The differences between the groups of businesses are tested through correlation analysis and subsequently evaluated with respect to the specifics of each group. The object of examination was more than 3000 companies annually, on average. The evaluated companies were divided, in terms of legal form, into joint-stock companies, cooperatives and limited liability companies, and in terms of size structure into small, medium and large businesses.

Keywords

Return on assets, return on equity, DuPont analysis, agricultural enterprise, company size, legal form, correlation analysis.

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