Complex assessment of economic viability and economic efficiency of a family farm and bankruptcy probability models

https://doi.org/10.7220/9786094674648Any farm performing its activities under the contemporary conditions encounters certain financial difficulties. The problem raised in the paper therefore is as follows: whether or not the economic viability and economic efficiency indicators of a farm indicative of bankruptcy probability of the farm. Indicators from three groups were analysed as part of the research: the indicators defining economic viability, economic efficiency, and bankruptcy probability of farms. The methods of convergent and discriminant validation and correlation analysis were employed in the research. The analysis has shown that the indicators of economic viability and economic efficiency of family farms as well as the bankruptcy probability forecasting models do not correlate to each other, but measure different phenomena. The Pearson correlation analysis has shown that there are no indicators of the economic viability and bankruptcy probability of a family farm that would correlate strongly to each other. The correlation coefficient values vary from 0.038 to 0.041, indicating weak correlation. This correlation may therefore be considered as the identifier of weak convergence and relatively strong indicator of discriminant validity. It can therefore be claimed that the indicators of economic viability and economic efficiency of a family farm do not measure the bankruptcy probability and are not applicable to forecasting of farm bankruptcy. The indicators of economic viability and efficiency of a family farm measure a different context, namely, economic viability of the family farm which may show the development prospects of the farmBioekonomikos plėtros fakultetasVytauto Didžiojo universiteta