The concept, causes, and measurement of farm financial distress

Abstract

This paper presents financial distress literature overview, case study and measuring analysis. Financial distress of farms has critical importance for farmer (managers), investors and shareholders. There are lack of researches of farm business financial distress and financial performance in Lithuania. In addition, researchers suggest using many definitions of financial distress which, economically approximate long term insolvency. This paper focused on specific cause’s study of farm financial distress. The main causes could be mentioned, such as errors made by farmers (manager), errors made in the farm policy and the importance of external factors. Furthermore researchers suggest using various financial ratios to measure financial distress, which implicates that these financial ratios represent the possible causes of financial distress.