Agric. Econ. - Czech, 2022, 68(12):445-454 | DOI: 10.17221/206/2022-AGRICECON

Vegetative cycle and bankruptcy predictors of agricultural firmsOriginal Paper

Mário Santiago Céu ORCID...*,1, Raquel Medeiros Gaspar ORCID...2
1 Advance/Research in Social Sciences and Management and ISEG - Lisbon School of Economics and Management, Universidade de Lisboa, Lisboa, Portugal
2 Cemapre/Research in Economics and Mathematics and ISEG - Lisbon School of Economics and Management, Universidade de Lisboa, Lisboa, Portugal

The characterisation of agricultural activity depends on what firms produce. In this article, we introduce the importance of the vegetative cycle in the prediction of bankruptcy of agricultural firms, analysing the financial ratios proposed by the classical models of Altman (1983), Ohlson (1980) and Zmijewski (1984). We consider a total of 2 228 Portuguese firms, with 83 failing between 2015 and 2019. The findings confirm that the differences between healthy and bankrupt firms depend on their vegetative cycle. Although predictors based on liquidity are helpful only in predicting the bankruptcy of non-perennial crop firms, activity predictors are better in identifying healthy perennial crop firms. In addition, we show substantial statistical differences in terms of liquidity and profitability, but only in healthy firms. The results encourage the topic of the vegetative cycle to be more present in the construction of more accurate bankruptcy prediction models.

Keywords: agriculture; bankruptcy prediction; financial ratios; non-perennial; perennial

Received: July 11, 2022; Accepted: November 9, 2022; Prepublished online: December 12, 2022; Published: December 21, 2022  Show citation

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Céu MS, Medeiros Gaspar R. Vegetative cycle and bankruptcy predictors of agricultural firms. Agric. Econ. - Czech. 2022;68(12):445-454. doi: 10.17221/206/2022-AGRICECON.
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