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Measuring The Effect Of Capital Structure And Seasonality On Expected Returns And Risk: The Fresh Market Vegetable Case

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  • Prevatt, J. Walter
  • Bauer, Larry L.
  • Kaiser, Eddie H.
  • Rathwell, P. James

Abstract

The effect of capital structure and seasonality of fresh market vegetables was examined via the Target MOTAD model. The level of capital indebtedness and the selection of either a fall or spring season resulted in significantly different levels of enterprise mixes, expected returns, risk magnitudes, rates of change of risk magnitudes, and operating capital requirements. The fall season demonstrated larger initial levels of risk and larger increases in the level of risk due to increases in indebtedness. The spring season showed larger increases in risk between minimum risk point and the maximum expected return point (linear programming solution) on the risk-efficient frontier. Operating capital requirements were substantially higher for the fall season than for the spring season. The operating capital requirements of the spring season were significantly affected by the level of indebtedness and the magnitude of risk selected by the grower, while the larger operating capital requirements of the fall season were only marginally affected.

Suggested Citation

  • Prevatt, J. Walter & Bauer, Larry L. & Kaiser, Eddie H. & Rathwell, P. James, 1992. "Measuring The Effect Of Capital Structure And Seasonality On Expected Returns And Risk: The Fresh Market Vegetable Case," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 24(1), pages 1-8, July.
    • Handle: RePEc:ags:sojoae:30366
    DOI: 10.22004/ag.econ.30366
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    References listed on IDEAS

    as
    1. Colette, W. Arden & Wall, G. Bryan, 1978. "Evaluating Vegetable Production For Market Windows As An Alternative For Limited Resource Farmers," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 10(2), pages 1-5, December.
    2. Babb, Emerson M. & Long, Burl F., 1987. "The Role Of Alternative Agricultural Enterprises In A Changing Agricultural Economy," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 19(1), pages 1-9, July.
    3. Zimet, David J. & Spreen, Thomas H., 1986. "A Target Motad Analysis of a Crop and Livestock Farm in Jefferson County, Florida," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 18(2), pages 175-186, December.
    4. McKinnell, Cathy S. & Kahl, Kandice H. & Curtis, Charles E., Jr., 1990. "A Regional Comparison Of Risk-Efficient Soybean Marketing Strategies," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 22(1), pages 1-10, July.
    5. Babb, E. M. & Long, B. F., 1987. "The Role of Alternative Agricultural Enterprises in a Changing Agricultural Economy," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 19(1), pages 7-16, July.
    6. Colette, W. Arden & Wall, G. Brian, 1978. "Evaluating Vegetable Production for Market Windows as an Alternative for Limited Resource Farmers," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 10(2), pages 189-193, December.
    7. Collette, Ardea & Wall, G. Brian, 1978. "Is Production For Market Windows A Viable Alternative For Limited Resource Farmers," 1978 Annual Meeting, August 6-9, Blacksburg, Virginia 284201, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Cited by:

    1. Vieth, Gary R. & Suppapanya, Pramote, 1996. "An Evaluation Of Selected Decision Models: A Case Of Crop Choice In Northern Thailand," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 28(2), pages 1-11, December.

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