ISSN 2284-7995, ISSN Online 2285-3952
 

PROFIT AND PROFITABILITY OF THE COMMERCIAL COMPANIES DEALING WITH DAIRY FARMING

Published in Scientific Papers. Series "Management, Economic Engineering in Agriculture and rural development", Vol. 20 ISSUE 1
Written by Agatha POPESCU, Alina MARCUTA, Cristina TINDECHE, Carmen ANGELESCU, Liviu MARCUTA

The paper analyzed net profit and profitability of a panel of six commercial companies (C1-C6) raising dairy cows and supplying milk on the capital market in the period 2009-2018, based on the data from Balance Sheets which were processed using fixed index, descriptive statistics, points method, regression modeling, correlations and determination coefficients. All the companies registered an increased net profit in the analyzed period except C3 which registered losses in 2010, 2012, 2013 and 2018 and C5 with losses in 2016. The highest annual profit average was achieved by C4 (Lei 1.19 Million) and the lowest one by C5 (Lei 0.3 Million). Net profit margin varied between 23 %, the highest level in C5, and 1.1 %, the lowest level in C3. The highest average net profit obtained per one million used assets was Lei 370 thousand in C5 and the lowest level was Lei 6 thousand in C3.For one million equity, the return of net profit accounted for Lei 0.42 million in C5 and Lei 30 thousand in C3. The total costs of the firms increased influencing the net profit. For Lei one million expenses, the average net profit varied between Lei 310 thousand in C5 and 20 thousand in C3. The total number of points received for each analyzed indicator led to the following classification of the companies, in the decreasing order of profitability: C5, C4,C2, C6,C1 and C3. The F test confirmed that the linear regression models attested that costs have an influence on net profit. However, only in case of C5 and C2, the variation of net profit was caused by total costs in a higher proportion than 50%, and in case of C4 and C1 with about 31 %. The correlation coefficients reflected a high positive connection between net profit and costs in C2 ( r = 0.994) and C6 (r = 0.711). The profitability analysis in these companies emphasized that even though they are in top agribusiness in dairy farming, they could get losses in a few years as net profit is influenced by costs. As a final conclusion, to increase net profit and profitability, the decision makers have to set up a development strategy of the business based on a deep financial analysis and prospecting the opportunities which could assure economic growth in the future.

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© 2019 To be cited: Scientific Papers. Series “Management, Economic Engineering in Agriculture and Rural Development“.

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