The Special Cases of Financial Analysis, and the Methodological Issues of their Handling in Agricultural Enterprise

Pupos, Tibor – Horváth, Péter – Szálteleki, Péter

Keywords: the time period assumption, working capital, net working capital, negative owner’s equity, financial indicators, Q14

The relevant literature dealing directly or indirectly with the topic of the paper is far from being limited. In spite of this, the interpretation of some indicators widely used for assessing the financial situation in practice, and the algorithms applied for their assessment are not properly elaborated on, and contain many contradictions and problems. These problems, however, arise partly from theoretical confusions, and partly from the lack of research about the correct definition of the related terms and concepts, and about the special situations that require unusual approaches to financial analysis. The paper looks for answers to problematic issues that have not been properly resolved using the empirical database of agricultural businesses that show many special features, focusing on situations when the net working capital and the owner’s equity are negative. The research findings undoubtedly support the conclusion that the specialities of the agricultural sector and the occurring unusual financial situations necessitate corrections or improvements to the indicators used in financial analysis, as well as the methodology of computing their values.