Finding Financial Distress Predictor of Farms

This paper analyses the predictors that can find farms in financial distress. The paper is developed by giving an overview of research methods with the calculation steps and guidelines of some financial distress predictors. The authors have analysed pros and cons of such financial distress predictors as debt-to-assets ratio, return on assets and return on equity ratios, debt service coverage ratio, interest expense ratios et al. Then there are given dynamics of the number of Lithuanian farms with their land-use changes and farmer's entrants and leavers proportions. The empirical results are thereafter presented with calculating financial distress predictors. The authors have used Lithuanian farms selected in Farm Accountancy Data Network for the research. The last section contains some concluding comments on connections between financial distress, debt-to-assets ratio, debt service coverage ratio and interest expense ratio.