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AP - Persistence In Financial Performance

The purpose of this paper was to examine the persistence of financial efficiency and performance measures for a sample of farms. The profit margin ratio, the asset turnover ratio, and three expense ratios were computed for each farm and year, and for the four-year period. The number of years each farm was in the top and bottom performance quartile was also computed. Results indicated that it was relatively difficult for a farm to consistently be in the top quartile over time. However, using four-year average data, there was a substantial difference in financial performance between farms in the top and bottom quartiles. Results suggest that using one year of data to benchmark is problematic. However, benchmarking using data for a longer period of time is essential to determining a farm’s competitive position.

Key Words: Profit Margin, Asset Turnover, Expense Ratio.


Author(s): Langemeier M. (1)

Organization(s): Dept. of Ag. Economics Kansas State University Manhattan (1)

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