The debt analysis of agricultural companies in the Slovak Republic

Annotation: In the paper we aimed to bring the debt analysis in the agricultural companies in the Slovak Republic. We analyzed 662 agricultural companies during period 2000 - 2008. We divided the companies according to the regions on the companies operate in the less favoured areas (LFA) and productive areas (PROD). For the debt evaluation we used the indicators of financial analysis ex post - debt indicators. The data were gained from the Information Sheets of Ministry of Agriculture SR which were prepared by The Research Institute of Agricultural and Food Economics. The followed companies make accounting account in the system of the double entry bookkeeping. The information from the financial reports (balance sheet and income sheet) is not enough to show us the frame of financial health of the enterprise. It is needed to elaborate and quantify the indicators of financial analysis which are specialized on the evaluation of present and past aspect and for the prediction of financial health to the future. The structure of own and foreign sources influences the financial stability of the company. The higher share of the equity indicates higher financial independence and stability of the company. It is desirable that enterprises should be into debt, because the foreign capital is cheaper than equity. The agricultural companies in the Slovak Republic had problems with utilizing of the credits because they were not solvent clients for banks. After the entrance of the Slovak Republic to the European Union the situation got better because of assert Common Agricultural Policy. In the presence the agricultural companies are supported by subsidies and subventions particularly from the EU. In the LFAs there is generally lower production costs and returns than in the PROD areas because of the more extensive production. The adverse economic results in the LFAs have been compensated through the system of LFA subsidies.