PR - FINANCIAL RATIOS AS INDICATORS OF ECONOMIC SUSTAINABILITY: SYNERGIES AND TRADE-OFFS FOR SWISS DAIRY FARMS

Abstract:
The presented analysis of synergies and trade-offs between indicators of economic sustainability used a large sample of panel data of Swiss dairy farms ranging from the years 2003 to 2014. Using these data, six common financial ratios are used to calculate economic indicators representing profitability, liquidity and stability. The correlation analysis shows a strong positive correlation (i.e. synergy) between the two financial ratios for profitability. Between the financial ratios for liquidity and stability, synergies and trade-offs exist to various extents.

The financial ratios are then normalized and harmonized to get an overall coherent picture and to construct an aggregate indicator of economic performance. The results are a promising starting point for analysing additional factors that should be considered in quantitative sustainability assessments.

Keywords: sustainability, indicator, financial ratio, farm management, assessment criteria