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Financial and economic performance of agricultural enterprises: analysis and policy improvement

Author

Listed:
  • Boiko, Vitalii
  • Lyzak, Mykhailo
  • Vasyltsiv, Taras
  • Lupak, Ruslan
  • Ohinok, Solomiia

Abstract

Purpose. The article aims to develop theoretical and applied foundations for forming a methodology to evaluate financial and economic performance of agricultural enterprises. Methodology / approach. The authors’ methodology for analysing enterprises’ financial and economic performance is formed in the research. This methodology is based on the use of the principal component analysis. Its use involves the composition of a series of empirical indicators of financial and economic performance based on a temporal approach, the calculation of coefficients of significance of indicators and components, and the calculation of combined and integral indicators of financial and economic performance. The developed methodology was tested using the example of 13 agricultural enterprises. The selected enterprises operate in the Lviv region of Ukraine. The study period covers the operational indicators of agricultural enterprises from 2017 to 2022. The Principal Component Analysis (PCA) method was employed to calculate the integral index of financial and economic performance for these agricultural enterprises. Econometric modeling was applied to identify the key determinants influencing the formation of this integral index. Results. The research results showed that despite the availability of resource capacities of agricultural enterprises, the process of forming their financial and economic performance is subject to the destabilising influence of war and market factors. The integral index of agricultural enterprises’ financial and economic performance has significantly impacted their operational efficiency. Through the application of econometric modelling, the primary determinants influencing the formation of this integral index of financial and economic performance in agricultural enterprises have been identified. To improve the financial and economic performance of farming enterprises, a targeted mechanism is developed that is aggregated from such strategic areas as the rationalisation of production costs, the improvement of financial and economic management, better budgeting, the development of management personnel, and the restructuring of market policy. Originality / scientific novelty. The originality of research lies in developing a methodology for assessing enterprises’ financial and economic performance using key indicators and components. This methodology creates an adequate information and analytical basis for improving the management of financial and monetary resources. Practical value / implications. The practical significance of the research results consists in the possibility of their application in the economic activity of agricultural enterprises to improve the process of forming the financial and economic performance of the latter.

Suggested Citation

  • Boiko, Vitalii & Lyzak, Mykhailo & Vasyltsiv, Taras & Lupak, Ruslan & Ohinok, Solomiia, . "Financial and economic performance of agricultural enterprises: analysis and policy improvement," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 10(4).
    • Handle: RePEc:ags:areint:355996
    DOI: 10.22004/ag.econ.355996
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    References listed on IDEAS

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