Analysis of farms and commercial companies operating activities in Slovakia based on quantification of chosen investments method

International Journal of Business and Marketing Management www.resjournals.org/ijbmm Vol.1(1); pp. 9-17, April 2013 Analysis of farms and commercial companies operating activities in Slovakia based on quantification of chosen investments method Miklovičová, Jana 1, Miklovičová, Silvia 1, *Mura Ladislav 2 and Felixová Irena 1 1 Faculty of Economics and Management, Slovak University of Agriculture, Tr. A. Hlinku 2, 949 76 Nitra, Slovakia. 2 Faculty of Economics, Selye University, Hradná 21, 945 01 Komárno, Slovakia. *E-mail for Correspondence: ladislav.mura@gmail.com ABSTRACT: In this article, the quantification of chosen investment methods and their application on operating evaluation of farms with land as a factor of production in Slovak Republic was studied. Investment methods chosen were payback period, average profitability and profitability index. On this basis, the advantage of operating on land, either for farms or for agricultural commercial companies in Slovakia for the period 2004 2009 was detected. The payback period which was quantified through capitalisation rate was in the range of 65 68 years which means that investment on land has a long return period, therefore, it is better for farmers to rent land. By capitalization rate, the level of long-term loans interest rate on land rent was four times higher than the values given by the Research Institute of Food and Agricultural Economics in Bratislava. The capitalization rate is inversely proportional to the payback period (that is, the higher the capitalization rate, the lower the payback period). The profitability index quantified in different regions of Slovakia did not reach the minimal value of 1 in any form of business. Commercial companies had better results in terms of average profitability than the farms which was mainly influenced by after tax earnings and subsidies of non-investment character. Key words: Payback period, profitability index, average rate of return, farms. INTRODUCTION Agriculture is a vital sector of the national economy of the Slovak Republic and one of the main priorities of agriculture is to provide food security for the ever increasing population. Agriculture produces not just the products of plant and animal origins, but also food for animals and shares in the production of raw material which is being processed in industries. The hallmark of agriculture is its connection with land. Land is a primary factor of production in agricultural production. Land is the most crucial factor of production in which farmers realise their farming activities, this because without land agricultural production cannot carried out Fertility and other inputs linked to fertilization influence the costs and the results of farming activities. Biological production process (which requires natural time and a specific agriculture-related season of production), and its structure, (which is reflected in the disparity of revenues), belongs to the other typical characters of agriculture (Chrastinová, 2001). The business environment in agriculture has been very challenging for both primary producers and processors in recent years. The world national and economic crises are shown in agricultural sector. The inputs of all commodities or mechanical systems have been on the increase yearly while on the other hand the prices of producers from agricultural primary production have been decreasing (Okenka, 2010). Agribusiness is an intricate complex activity that ensures the needs on one hand, and on the other hand reproduction of agro-entrepreneurs. In order for agriculture to fulfil the current and perspective production and non-production activities there is need to have prosperous farms and companies and therefore successful agro-entrepreneurs (Baco, 2010). One of the main goals of the Slovak agriculture is its current and future prosperity in the European market. Many factors have impact on its economic efficiency but the determining factor is the Common policy of the European Union which currently provides around 30% of gross income for farmers through a variety of supports (Chrastinová et al., 2011). The Single Area Payment Scheme (SAPS) has positive and statistically significant impact on land rents in the EU. The share

10 of rented land is higher for corporate farms than for individual ones, family farms benefit more from the SAPS than corporate farms (Ciaian, Kancs, 2009). The SAPS brought two major changes to farmers in the New EU member States. Firstly, the switch to the SAPS decoupled policy support from farm production. Secondly, it increased the average payments per farm (Ciaian et al., 2010). In a highly competitive environment, internationalization is a very attractive strategic investment for all type of firms. However, making the decision on internationalization as another strategic investment is very difficult because of high uncertainties and risks (Atik, 2012). Strategic investment decisions have substantial effects on the long term financial and operational performance of companies (Carr, Tomkins, 1996). The interest in capital equipment analysis that has been evident in the business literature for the past five years is the product of numerous social, economic, and business developments of the post war period. No conclusive listing of these developments can be attempted here. However, four of them should be mentioned which are of particular importance in this search for a more systematic method for discovering, evaluating, and selecting investment opportunities. These are: (1) the high level of capital outlays (in absolute terms); (2) the growth in the size of business firms; (3) the delegation of responsibility for initiating recommendations from the top management to the profit centre, which has been part of the general movement toward decentralization; and (4) the growing use of scientific management in the operations of the business firm (Gordon and Shapiro, 1956). Devinaga s (2012) study looks at investment decision rules which are applied when considering portfolio selection. Most major corporations use two or more investment decision rules to evaluate requests for capital appropriations. However, the payback rule and the average accounting rate of return rules are relatively simple and subject to a number of advantages and disadvantages. According to Akalu (2001) methods that are used in estimating the return on investment project or in determining the value of the particular project can be categorized into two ways traditional method and the discounted cash flow technique (which include, net present value and internal rate of return). Traditional method uses the payback method and average rate of return. Surveys of corporate capital budgeting practice indicate that payback is a widely used method of project evaluation (Boyle and Guthrie, 1997). The payback method increases with political risk. In the case of agriculture, the payback period is longer compare to the industrial sector. That is why the capitalist prefers to move to industry and commerce (Borzán et al., 2007). Holmén and Pramborg (2009) conclude that in the presence of capital market imperfections, unsystematic and country-specific political risks are important because of the fact that these risks are difficult to estimate (rendering high deliberation costs) hence managers are inclined to use simple rules of thumb for their capital budgeting decisions. MATERIAL AND METHODS Data was obtained from the database of Research Institute of Agricultural and Food Economics. The monitored period was between 2004 2009. The database was created with sheets of financial statements, which are the balance sheet and statement of profit and loss. Other part of the database was created with chosen and specific indicators for agricultural companies operating in the Slovak Republic. All data of the Slovak Republic for the period between 2004 2008 were converted to euros by conversion rate of 30.126 SKK/EUR. In this investment method, the payback period, average profitability and index of profitability will be quantified in two companies cooperatives and commercial companies. Slovakia was divided into two regions according to the natural conditions of the country, the areas with better natural conditions (PROD) and the less favoured areas (LFA). The part with better natural conditions are Bratislava, Trnava and Nitra. The other part belong to the LFA and they are Trenčín, Žilina, Prešov, Banská Bystrica and Košice. For the comparison of rent with market price of land, the method of capitalization rate by Gwartney (2004) was used. His method is based on the following formula: Capitalization rate is an indirect method used for the measurement of investment payback period. It is the return on investment from property based on the expected incomes which the property will generate. Capitalization rate is used by investors for the estimation of the potential return on his investment. It is a very sensitive indicator and its estimation requires exact expertise. Due to this fact the indicator payback period which is a more instructive indicator and expresses how long it will take to pay the price of the land in the case of its renting was used: (1) (2)

11 1200 1000 800 600 400 200 Cooperatives Companies 0-200 NR PO TT BB ZA KE BA TN -400 Figure 1. Development of profitability index with subsidies on farms and in commercial companies in regions of Slovakia. The dynamic or static method can be used for the calculation of payback period. In the static method the amount of years covering the rent is a reciprocal value of the capitalization rate. Dynamic method counts with time value of money and it allows arrangeing the number of years with respect to the required interest rate. The dynamic method considers time factor; the payback period is calculated according to the formula: where: n discounted payback period, P 0 Land rent in time 0, r interest rate, CP 0 Land price in time 0 This formula can be quantified in situation where the capitalization rate is higher than the interest rate. The interest rate from long-term bank loans was taken into consideration. The payback period method has several advantages and disadvantages. The main advantage is that this method is easy to use and also easy to understand. It is not necessary to do a great deal of calculation to find out how many years it takes to get the initial outlay back. Therefore when analysts need a quick measure of risk they may use the payback period method to see if the invested capital will be paid back in a reasonable period of time. The main disadvantage of this method is that it completely ignores the value of money over time. The payback period method does not count the cash inflows produced after the initial investment has been recovered (Groppelli and Nikbakht, 2006). Other method of economic efficiency evaluation is profitability index (Figure 1) which puts into consideration the ratio of financial income and capital expense or discounted financial incomes and capital expense. The profitability index was calculated using the formula: (3) The general decision rule then is to accept the project with the greatest profitability index. When using the profitability index as an initial screening device, all projects with an index of less than 1 should be rejected. The profitability index is simply an alternative way of expressing net present value data. The profitability index expresses the relative profitability and thus, useful for comparing projects that require differing amounts of cash outlay (Greer and Kolbe, 2003). If the net present value is positive, the profitability index is higher than 1 and the investment is acceptable. If the net present value is negative, the profitability index is lower than 1 and the investment is not acceptable. The average profitability (Figure 2) belongs to other methods of investment efficiency evaluation. The effect of investment is the profit and It counts with earnings after taxes; however if the investment is for a period longer than one (4)

12 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% -2.00% -4.00% -6.00% NR PO TT BB ZA KE BA TN Cooperatives Companies Source: tables Figure 11,12 2. Development of average profitability with subsidies on farms and in commercial companies in regions of Slovakia. year all reached earnings after taxes have to be added. Except for net profit, this indicator contains the time of investment use which is multiplied by the average amount of capital expenses for the monitored period. The method used for calculating average profitability is given below: where: V p land average profitability, Z n yearly earnings after taxes in each year of time use, I p average yearly price of land, N land time use, n years of time use Average profitability is expressed in percentage. High value of profitability means a good land use. (5) RESULTS Land price and land rent for Slovakia was obtained from the Research Institute of Agriculture and Food Economics. According to Decree No. 38/2005 the average land rent is an amount of 1.5% of the official land price. The capitalization rate is the share of rent and price of land; it means that capitalization rate is being monitored so as to ensure a constant level of 1.5%. Quantified payback period according to this indicator ranges from 65 to 68 years it means that land price in each regions of Slovakia will be paid by rent in 65 to 68 years time. Discounted payback period is the period within which the interest rate of long-term loan is lower than capitalization rate. If the interest rate would be 1% the discounted payback period would be from 108 to 114 years (Table 1). If we considered that the capitalization rate is on the level of the interest rate of long-term loans then we could model the values of land rent by land price etc Considering capitalization rate on the level of interest rate of long-term loans, the amount of land rent will be four times higher than 1.5 % which is the official value of land price according to Decree No. 38/2005. Land rent is in the range of 46 uto71 /ha of agricultural land. According to the results in Table 2 we can say that the higher the value of capitalization rates the lower the payback period. The lowest interest rate of 4.69% had a payback period of 21 years; it means that land price will be paid through land rent in 21 years and when the highest level of interest rate was 5.91% the land price was paid in 17 years. Decreasing the capitalization rate by 4.5 % gave a payback period of 33 to 73 years. Profitability index which is another indicator of investment decision can be counted by quantifying financial incomes and capital expenses through their share. In tables 3 and 4 are calculated financial incomes and capital expenses of farms. In tables 7 and 8 are calculated financial incomes and capital expenses of commercial companies. Profitability index higher than 1 is a criterion of investment acceptation or it is advantageous to invest into the land but, if profitability index is lower than 1 it is not advantageous to invest into land purchase. If the profitability index is equal to

13 Table 1. Development of payback period. Indicator 2004 2005 2006 2007 2008 2009 Land price /ha p.p. 946 981 1017 1121 1211 1256 Land rent /ha p.p. 14 15 15 17 18 19 Capitalization rate (%) 1.48 1.53 1.48 1.52 1.49 1.51 Payback period in years 68 65 68 66 67 66 Discounted payback period in years ir = 1% 113 107 114 108 112 109 Source: RIAFE, own calculation. Table 2. Development of payback period by adjusted values of capitalization rate and land rent. Indicator 2004 2005 2006 2007 2008 2009 Capitalization rate (%) 5.91 4.69 5.82 5.69 5.83 5.51 Land price /ha p.p. 946 981 1017 1121 1211 1256 Land rent /ha p.p. 56 46 59 64 71 69 Payback period in years 17 21 17 18 17 18 Discounted payback period by r = 4.5% 33 73 34 36 34 39 Source: RIAFE, ECB, own calculation. Table 3. Financial incomes (Earnings from operating activity and depreciation) of farms in Slovak regions. Region 2004 2005 2006 2007 2008 2009 NR 215 176 168 217 277 64 PO 123 117 124 183 195 187 TT 57 192 193 295 252 108 BB 222 263 305 315 380 306 ZA 133 356 361 390 384 351 KE -53 211 194 504 499 593 BA 223 84 152 467 256 404 TN 205 196 191 430 441 182 Source: Own calculation, Information Sheets of RIAFE. Table 4. Capital expenses of farms in Slovak regions. Region Official land price Average price of non-current asset Capital expenses NR 2241 1209 3450 PO 521 1135 1656 TT 2349 1475 3824 BB 643 955 1598 ZA 385 1384 1769 KE 896 904 1800 BA 2025 1424 3449 TN 935 1626 2561 Source: own calculation, RIAFE one then it is an indifferent situation and it is on managerial decision whether land should be purchased or not. Calculated profitability index of farms in regions of Slovakia was lower than one for the interest rates. The value of indicator for interest rate is similar in Slovak regions. In Nitra and Trnava regions the values of index are lower than 0.3 what can be consider a negative trend. The better situation is on farms in Banská Bystrica, Žilina and Košice regions

14 Table 5. Quantification of profitability index of farms in /ha of agricultural land. Region / ir 5.91% 4.69% 5.82% 5.69% 5.83% 5.59% NR 0.27 0.28 0.27 0.27 0.27 0.27 PO 0.45 0.47 0.45 0.46 0.45 0.46 TT 0.23 0.24 0.23 0.23 0.23 0.23 BB 0.91 0.95 0.91 0.92 0.91 0.92 ZA 0.90 0.94 0.90 0.91 0.90 0.91 KE 0.83 0.88 0.83 0.84 0.83 0.84 BA 0.37 0.38 0.37 0.37 0.37 0.37 TN 0.52 0.54 0.52 0.52 0.52 0.53 Source: own calculation. Table 6. Modelled financial incomes of farms in /ha of agricultural land. Region / ir 5.91% 4.69% 5.82% 5.69% 5.83% 5.59% NR 509 483 507 504 507 502 PO 184 170 182 180 182 179 TT 592 562 591 587 591 584 BB 156 144 155 154 155 153 ZA 186 172 185 184 185 183 KE 322 306 321 319 321 318 BA 440 412 438 435 439 433 TN 248 227 246 244 246 243 Source: own calculation. Table 7. Financial incomes of commercial companies in Slovak regions. Region 2004 2005 2006 2007 2008 2009 NR 225 174 195 212 283 147 PO 97 118 132 198 200 281 TT 102 323 276 496 377 293 BB 257 102 24 186 228 201 ZA 83 122 143 181 202 180 KE -70-79 -76 193 155 147 BA 171 410 279 777 705 295 TN 136 230 203 261 461 182 Source: own calculation, Information sheets. Table 8. Capital expenses of commercial companies in Slovak regions. Region Official land price Average value of non-current asset Capital expenses NR 2241 1357 3598 PO 521 610 1131 TT 2349 2082 4431 BB 643 1000 1643 ZA 385 905 1290 KE 896 817 1713 BA 2025 2252 4277 TN 935 1290 2225 Source: own calculation, information sheets. where the amount of index ranges from 0.83 to 0.95(Table 5).

15 Table 9. Quantification of profitability index in commercial companies in /ha. OS 5.91% 4.69% 5.82% 5.69% 5.83% 5.59% NR 0.28 0.29 0.28 0.28 0.28 0.29 PO 0.72 0.75 0.72 0.73 0.72 0.73 TT 0.34 0.35 0.34 0.34 0.34 0.34 BB 0.50 0.52 0.50 0.50 0.50 0.50 ZA 0.57 0.59 0.57 0.57 0.57 0.57 KE 0.10 0.11 0.10 0.10 0.10 0.10 BA 0.50 0.52 0.50 0.50 0.50 0.50 TN 0.53 0.56 0.54 0.54 0.54 0.54 Source: own calculation. Table 10. Modelled financial incomes of commercial companies in /ha. Regions 5.91% 4.69% 5.82% 5.69% 5.83% 5.59% NR 520 493 518 515 518 513 PO 64 54 63 62 63 61 TT 590 555 587 584 588 581 BB 168 154 166 164 166 163 ZA 113 102 112 111 112 110 KE 311 296 310 308 310 307 BA 434 399 432 429 432 425 TN 209 191 207 205 207 204 Source: own calculation. Table 11. Average profitability of land for farms in Slovak regions. Region Average profitability with subsidies in Euro Average profitability without subsidies in Euro Average profitability with subsidies in % Average profitability without subsidies in % NR 106.47-1 097.74 0.79-8.16 PO 90.09-1 898.63 2.88-60.74 TT -107.04-1 525.4-0.76-10.82 BB 205.56-1 546.91 2.82-40.10 ZA 19.59-2 082.26 0.85-90.14 KE 250.06-1 258.07 4.65-23.40 BA 476.21-707.57 3.92-5.82 TN -244.68-1 859.79-4.36-27.96 Source: RIAFE, own calculation. Since the index of profitability did not reached the minimum value equal to one in any region we have to model the financial incomes to reach the profitability index value higher than one or at least equal to one. In the following table there are modelled increased values of financial incomes to reach the profitability index equal to one. To reach the values equal to one we had to increase financial incomes of 412 /ha of agricultural land up to 592 /ha in farms operating in productive areas. In the regions of less favoured areas the financial incomes had to be increased at least from about 144 /ha (value reached in Banská Bystrica region) up to 322 /ha of agricultural land (value reached in Košice region) (Table 6). The values of profitability index in commercial companies were lower than in each region of Slovakia. The best values of index were reached by the commercial companies of Prešov region. Here the amount of profitability index ranges from 0.72 to 0,75. Around half values of profitability index were reached by the commercial companies in Banská

16 Table 12. Average profitability of commercial companies in Slovak regions. Regions Average profitability index with subsidies in euro Average profitability index without subsidies in euro Average profitability with subsidies in % Average profitability without subsidies in % NR 184.21-980.4 1.38-7.29 PO 436.90-1 305.8 13.96-41.76 TT 506.25-872.86 3.59-6.19 BB 305.02-1 237.02 7.91-32.06 ZA 106-1 654.29 4.59-71.61 KE 159.07-1 288.41 2.96-23.97 BA 1092.90-493.09 9.00-4.06 TN -98.43-1568.75 4.82-27.96 Source: VUEPP, own calculation, Bystrica, Bratislava and Trenčín regions. The lowest or the most disadvantageous value of profitability index was in Košice region where the index was about 0.1(Table 9). Each financial income was increased to reach its maximum value of profitability index. Financial income in Prešov region was increased by the lowest value (from 54 /ha of agricultural land to 64 /ha of agricultural land). The highest value of increase was noted in financial income in Trnava region and it was from 555 /ha of agricultural land by the interest rate of 4.69% to 590 /ha of agricultural land by the interest rate of 5.91%. Similarly, the amounts of financial incomes in Nitra and Bratislava regions were increased by higher values in comparison with other regions of Slovakia (from 399 /ha to 520 /ha of agricultural land) (Table 5). Average profitability of land shares was the sum of earnings after taxes from one hectare of land and land price multiplied by the years of usage. This method was based on net profit or economic gain of asset usage, in our case it was land. For the profit we considered earnings after taxes from operating activity for the period from 2004 2009 and for acquisition price the average official land price was chosen. According to the results in Table 11 one can say that the highest amount of average profitability per hectare of land without subsidies was obtained in farms of Bratislava region, but its land price was the highest which had an impact on the value of the average land profitability level of 3.92%. In Trenčín region, farms had losses which amounted to -244.68 /ha of agricultural land and the average land price in this region was 935 /ha. The average land profitability was negative (-4.36%) in this region. Negative average land profitability in the amount of -0.76% was reached in Trnava region where the farms operated with an average loss of -107.04 /ha of agricultural land. In other regions the average land profitability was positive. If the amount of non-invested subsidies is not considered, the farms will run in loss in all periods. Without subsidies the average land profitability was negative and the lowest average land profitability was reached in Žilina region (-90.14%). This negative value was influenced by peak loss in this region and with the lowest land price between all Slovak regions. Higher land profitability with subsidies was in the regions of less favoured areas. Farms in Košice and Prešov regions reached relatively high profitability in comparison with other regions and the land price was on the lowest level which had a positive impact on the average profitability. The level of 4.65% was obtained in Košice region while 2.88% in Prešov region. Average profitability in commercial companies reached better results than on the farms which was mainly influenced by the positive development of earnings after taxes with subsidies during 2004 2009. Paradoxically, commercial companies operating in productive areas had the lowest land profitability. In Nitra region, there was the average land profitability on the level of 1.38% and in Trnava region 3.59%. The land prices, which are in these regions the highest, had shared on the low values of the average profitability. On the other hand, the result of commercial companies in Prešov region was very positive. Their average profitability was on the level of 436.90 /ha of agricultural land (around 14%). The lowest average profitability without subsidies was in Žilina region (-71.61%) and the highest in Bratislava region (-4.06%)(Table 12). Conclusion In this paper, chosen investment methods such as payback period, average profitability and profitability index in two forms of companies farms and commercial companies which operate in the conditions of Slovak agriculture was quantified. Payback period quantified through capitalization rate reached 65 68 years which means that the land price

17 will be paid through land rent for 65 68 years. By the capitalization rate on the level of long-term loans interest rate the land rent is 4times higher than values in Research Institute of Agricultural Food and Economics in Bratislava. When the capitalization rate is higher, the payback period is lower. With the lowest interest rate of 4.69% the payback period was 21 years and with the highest interest rate of 5.91% the payback period was 17 years. The profitability index was quantified in regions of Slovakia which were divided into the regions of productive areas (Bratislava, Nitra, Trnava) and regions of less favored areas (Trenčín, Prešov, Košice, Banská Bystrica, Žilina). The profitability index did not reach the minimal value of 1 in any of the regions, as a result the financial incomes was modify so as to obtained a minimal profitability index value of 1. Financial incomes in the productive areas was increased from 412 592 /ha of agricultural land and in less favored areas about 144 322 /ha of agricultural land. The average profitability in commercial companies reached better results than on farms which is influenced mainly by positive earnings after taxes. One can say that without subsidies the companies and farms will run at a loss. The highest average profitability was in Bratislava region which had the highest land price. ACKNOWLEDGEMENT This paper is based on the research project of Vega number V1/0052/13 Economic efficiency of production factor land. References Akalu MM (2001). Re-examining project appraisal and control: developing a focus on wealth creation. Int. J. Project Manage. ISSN 0263-7863. 9(7):375-389 Atik A (2012). A strategic investment decision: Internationalization of SMEs - A Multiple Appraisal Approach and Illustration with a Case Study. ibusiness. ISSN 2150-4083. 4(2):146-156 Baco P (2010). Business in agriculture of the Slovak Republic. In: Proceeding of Slovak Professional Conference Business in agriculture. 1. Edition. Nitra : Agroinštitút ISBN 978-80-7139-136-4. pp.,89 Borzán A, Szigeti C,Lentner C (2007). Possibilities and problems financing the Hungarian Agriculture. Revista Tinerilor Economisty Journal. ISSN 1583-9982 pp.,11-116 Boyle GW, Guthrie GA (1997). Payback and the value of waiting to invest. working paper. http://papers.ssrn.com,university of Otago, Dunedin, N.Z.; University of Canterbury, Canterbury, U.K. Posted on the Financial Economics Network in 1997. Carr C,Tomkins C (1996). Strategic Investment Decision: The Importance of SCM: A Comparative Analysis of 51 Case Studies in U.K, U.S. and German Companies. Manage Acc. Res. 7(2):199-217 Ciaian K (2009). The Capitalisation of Area Payments into Farmland: Rents Micro Evidence from the New EU Member States. Economics and Econometrics Research Institute. ISSN 2031-4892 pp.,4 Ciaian KS (2010). EU Land Markets and the Common Agricultural Policy. In: Agricultural and Rural Policy, CEPS, Brussel, February 2010. Devinaga R (2012). A review on the application of investment decision rules applied when considering portfolio selection. Int. J. Bus. Strategy. ISSN 1553-9563. 12:2 Gordon JJ, Shapiro E (1956). Capital Equipment Analysis: The Required Rate of Profit. Management Science. ISSN 1526-550. 13(1):102-110 Greer GE,Kolbe PT (2003). Investment analysis for real estate decision. 5 Th edition. Chicago. ISBN 0-7931-3660-1 Groppelli AA,Nikbakht E (2006). Finance. 5 th edition. New York. ISBN 978-0-7641-3420-3. pp.158-159 Gwartney T (1999). Estimating land values. Online: http://static.auctionservices.com/documents/11/estimating_land_values.pdf Holmén M,Pramborg B (2009). Capital Budgeting and Political Risk: Empirical Evidence. J. Int. Fin. Manage and Acc. ISSN 1467-646X. 20(2):10-134 Chrastinová Z (2001). Financing of companies in agriculture. Bratislava: The Research Institute of Agricultural and Food Economics, ISBN 80-8058-202-5. p.80 Chrastinová Z. Ďuríčková I, Grznár P, Kubanková M, Palacková A, Varoščák J, Trubačová A, Burianová V (2011). Evaluation of economic effectiveness of agricultural production according to the company type. 1. Edition. Bratislava: Research Institute of Agricultural and Food Economics. ISBN 978-80-8058-559-4. p.84 Okenka I (2010). Few words for introduction... In: Proceeding of Slovak Professional conference Business in agriculture. 1. Edition. Nitra : Agroinštitút.. ISBN 978-80-7139-136-4. p.,89