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Free Content Persistence in Financial Performance

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The objective of this paper was to examine the persistence of financial performance measures for a sample of farms over a five-year period. The profit margin ratio and asset turnover ratio were computed for each farm and year, and for the 2004 to 2008 period. The number of years each farm was in the top and bottom performance quartiles was also computed and discussed. Results indicated that it was relatively difficult for a farm to consistently be in the top quartile over time. However, using five-year average data, there was a substantial difference in financial performance between farms in the top and bottom quartiles. Results suggest that using one year of data to benchmark is problematic. Therefore, benchmarking using data for a longer time period is essential in determining whether a farm has a competitive advantage.

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Document Type: Regular Paper

Publication date: 2010-04-01

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