SHORT-TERM CREDITING EFFICIENCY OF AGRICULTURAL PRODUCTS MANUFACTURERS
Abstract. Cash gaps in the financing of the agricultural enterprises determine the attraction of the borrowed funds, which contributes to the growth of the production, allows restructuring the technological base on an innovative basis and is the key to the growing dynamics of their own. Due to this, the management of the attraction and the efficient use of the borrowed funds is one of the most important functions of the agricultural formations management. At the same time, the subordination of the agricultural production to the law of diminishing returns causes dysfunctions in the formation of the financial leverage effect, which reduces the efficiency of the use of the credit resources to finance the production costs of the agricultural producers. In particular, the assessment of the effectiveness of the borrowed capital by the agricultural enterprises from the standpoint of the classical approach in calculating the financial leverage effect showed that the latter ignores the law of diminishing returns, which leads to the erroneous conclusions as to the feasibility of using short-term loans to finance the operating costs. Taken together, this necessitates the substantiation of new scientific and methodological approaches to the organization of effective short-term crediting to the agricultural producers.
The results of the research show that the declining payback of increasing the intensity of the agricultural production significantly affects the effectiveness of the credit resources to finance the operating costs. The methodological tools tested during the research allowed to establish a decrease in the optimal level of the production intensity under the conditions of credit coverage of part of the costs compared to their self-financing. Besides it has been determined that under the conditions of combining own and borrowed funds, the optimal level of production intensity does not depend on the structure of the working capital by the financing sources. Along with this, there are well-founded approaches that allow calculating the level of the credit coverage of the costs, at which, without reducing the expected profit in terms of self-financing, much larger volumes of the marketable products become achievable. In addition, it is established that the reduction of the optimal level of the production intensity under the use of the credit resources is proportional to the level of the interest rates. It is all the more significant the higher are the interest rates.
Keywords: credit, loan interest, financial leverage effect, attracted capital, the law of diminishing returns, own working capital, expenses, profitability.
JEL Classification C67, E47, Q14
Formulas: 10; fig.: 2; tabl.: 1; bibl.: 14.
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Copyright (c) 2021 О. Олійник, В. Макогон, O. Скоромна , В. Міщенко, С. Брік
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