Description:
Detection of farm bankruptcies for a better prevention. An application of the score method in the field of agriculture - Since the beginning of the eighties, the number of farm bankruptcies has increased a great deal in Western Europe. This has led researchers, public institutions and bankers to look for indicators able to detect, as soon as possible, financial strains. At first, investigations focused on a single criterion, like economie size, net farm income, disposable income, or net cash flow. However, although one of these criteria may well be relevant, it became evident that one of them was not enough to analyse the economic capacities of a farm or to detect a bankruptcy in the near future. Results can be improved placing several indicators side by side, but this leads to quite complicated systems, despite their pertinence. Thanks to computerization which facilitates the use of complex statistical methods, it has become easier to select and combine a few criteria in a more efficient way. As in the case of industrial and commercial firms, the score method appeared to be very relevant for detect ing farm bankruptcies with a limited number of economie and financial ratios. Moreover, after selecting and combining a few ratios in linear form, a score function gives a single mark which is easy to interpret. After having presented the methodology, this paper deals with the effectiveness of score functions for detecting farm bankruptcies in five French subregions with various types of agriculture and of course different systems of production. By opposing farms in a healthy financial situation and farms facing very serious problems, each score function turns out to be a good tool for analysing and detecting financial stresses in farming independently of the size or the system of production. The study also shows that a possible harmonization of the five score achieved functions could be achieved by combining the following three rates : the debt to assets ratio, the short-term liabilities on current assets and the weight of debt service charges. Compared to the «optimal» ones, the «harmonised» functions are almost as efficient but this does not mean that a single score function can be built because coefficients of each ratio vary a lot from sub-region to sub-region. Finally, it appears that the score function is not only a good tool for indicating threats of farm bankruptcies. Indeed, it can also be a good aid to management for the follow up and comparison of results drawn year after year from agricultural enterprises.
La multiplication des cas de défaillances financières en agriculture conduit à rechercher les moyens de détecter le plus rapidement possible les exploitations en situation financière difficile. Comme pour les entreprises industrielles et commerciales, les fonctions score, combinaisons linéaires d'un nombre limité de ratios économiques et financiers, s'avèrent bien adaptées à une telle finalité. Dans les cinq départements étudiés, les différentes fonctions obtenues se sont révélées toutes pertinentes pour analyser les risques financiers des entreprises agricoles, indépendamment de leur dimension et de leur système de production. L'utilisation de fonctions réalisées sur tous les sites, à partir de trois ratios identiques, a montré l'intérêt d'une harmonisation des critères. Instruments de détection précoce des difficultés financières, les fonctions score peuvent également être utilisées comme outils d'aide à la gestion pour le suivi pluriannuel des résultats des entreprises.