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Operating Risk Analysis For Agricultural Investments

Author

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  • Camelia Burja

    (‘1 Decembrie 1918‘ University of Alba Iulia Romania)

Abstract

Decisions for substantiating the investments projects in agricultural sector are basedon the assessment of the business's profitability but also, of the economic risk assumed by theenterprisers. The paper presents a dynamic analysis model of the operating risk which is validatedin a case study using an example of an agricultural holding from viticulture. The appreciation ofthe economic risk is based on the Degree of operating leverage indicator, and the proposedanalysis model offers the possibilities to identify the factors which can lead to an adequatemanagement of risk. The case study presented validates the theoretical approach and highlightsthat the economic risk diminished due to modification of costs structure, flexibility of activity,variation of safety margin, sales and profit.

Suggested Citation

  • Camelia Burja, 2012. "Operating Risk Analysis For Agricultural Investments," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(14), pages 1-15.
  • Handle: RePEc:alu:journl:v:2:y:2012:i:14:p:15
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    More about this item

    Keywords

    operating risk; agriculture; investment; degree of operating leverage;

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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