The influence of indebtedness on the profitability of sales in agriculture in the Czech Republic

Debt is an integral part of the business. It is given that the high indebtedness of a company may not only be a negative signal but that its growth can positively contribute to higher profitability, which increases the company's market value. In the agricultural sector in the Czech Republic, the most discussed economic problems are short sales on the domestic market and low purchase prices of agricultural products. This study proves that in 2016-2019, the number of enterprises in the agricultural sector was, on average, 2310. The most significant decrease occurred in 2020 to 1959 enterprises. However, this situation can largely be attributed to the Covid-19 pandemic. The contribution aims to analyze agricultural enterprises, determine the average development of their indebtedness over time, and determine how this indicator affects sales profitability. The data is taken from the CRIBIS database of CRIF – Czech Credit Bureau from 2016 to 2020. Correlation analysis is used. Using this, it is established that the company's indebtedness is related to sales profitability. Correlation analysis is used further to determine whether the size of the company, determined by the number of employees and other parameters, isnt associated with the profitability of sales of these companies. The correlation between the size of the company and its number in the given years has not been confirmed. This paper brings conclusions, which can be implemented in practical agricultural company driving by managers' view.