Financial ratio analysis using ARMS data

Bruce L. Ahrendsen; Ani L. Katchova

doi:10.1108/00021461211250492

Login

Welcome:
Guest

Search for:

Browse:

Product Information:

Resources:

Agricultural Finance Review

ISSN: 0002-1466

Online from: 2000

Subject Area: Economics

Content: Latest Issue | Latest Issue RSS | Previous Issues

Options: To add Favourites and Table of Contents Alerts please take a Emerald profile

Financial ratio analysis using ARMS data

Document Information:
Title:	Financial ratio analysis using ARMS data
Author(s):	Bruce L. Ahrendsen, (Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas, Fayetteville, Arkansas, USA), Ani L. Katchova, (Department of Agricultural Economics, University of Kentucky, Lexington, Kentucky, USA)
Citation:	Bruce L. Ahrendsen, Ani L. Katchova, (2012) "Financial ratio analysis using ARMS data", Agricultural Finance Review, Vol. 72 Iss: 2, pp.262 - 272
Keywords:	ARMS, Critical zone, Farm business, Farms, Financial performance, Financial ratio, Imputation, Performance measures
Article type:	Research paper
DOI:	10.1108/00021461211250492 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Acknowledgements:	Senior authorship is shared. This material is based upon work partially supported by the Economic Research Service, US Department of Agricul-ture. The views expressed herein are those of the authors and do not necessarily reflect the views of the University of Arkansas, Division of Agriculture; University of Kentucky; or the US Department of Agriculture.
Abstract:	Purpose – The purpose of this research is to evaluate the financial performance measures calculated and reported by the Economic Resource Service (ERS) from Agricultural Resource Management Survey (ARMS) data. The evaluation includes the calculation method and the underlying assumptions used in obtaining the reported values. Recommendations for improving the information reported are proposed to ERS. Design/methodology/approach – The financial measures calculated and reported are compared with those recommended by the Farm Financial Standards Council (FFSC). The underlying assumptions are identified by analyzing the software code used in calculating the values reported. The values reported by ERS are duplicated and alternative methods for calculating the financial performance measures are considered. The values obtained from the various calculation methods are compared and contrasted. Findings – Recommendations for ERS include: calculate and report the financial measures recommended by FFSC, note values that are imputed, periodically update and validate assumptions used in calculating imputed values, review its policy for flagging estimates as statistically unreliable, report medians and other select percentiles, and consider reporting the percent of farm businesses that have values within critical zones. Originality/value – A total of four methods for calculating financial performance measures are compared and contrasted. These are the aggregate mean, sample mean, sample median, and percentage of farm businesses with values in critical zones.