clustering of agricultural enterprises

Agricultural business is a very specific branch which is characterized by very low financial performance while this characteristic is given mainly by external factors as market pricing of agricultural commodities on one side, and production costs of agricultural commodities on the other side. This way, agricultural enterprises recognize negative values of gross margin in the Profit and Loss Statement but positive value of operating profit after even there are items of costs which are deducted. These results are derived from agricultural production subsidies which are recognized as income in the P/L Statement. In connection with this fact, the government subsidies are a substantial component of financial performance of agricultural enterprises.Primary research proceeded on the statistical sample of one hundred agricultural companies, has shown that also other specifics influencing financial performance of these businesses exist here. In order to determine the influences, the cluster analysis has been applied at using more than 10 variables. This approach has led to construction of clusters (groups) of agricultural business entities with different characteristics of the group. The objective of this paper is to identify the main determinants of financial performance of agricultural enterprises and to determine their influences under different economic characteristics of these business entities. For this purpose, the regression analysis has been subsequently applied on the groups of companies coming out from the cluster analysis. Besides the operating profit which is the main driving force of financial performance measured with the economic value added (EVA) in agricultural enterprises, also capital structure and cost of capital have been observed as very strong influences on financial performance but these factors have different directions of their influence on the economic value added under different financial characteristics of agricultural enterprises.