IMPACTS OF FINANCIAL CHARACTERISTICS AND THE BOOM-BUST CYCLE ON THE FARM INVENTORY-CASH FLOW RELATIONSHIP

The sensitivity of farm inventory investment to movements in cash flow is tested. Inventories should be sensitive to shifts in cash flow because inventory investment is readily reversible and inventories are a significant portion of assets. Investment models estimated with Kansas farm panel data indicate that: (a) farms absorb internal finance shocks by adjusting inventories, (b) the inventory investment of livestock and high-debt farms are more sensitive to movements in cash flow than crop and low-debt farms, and (c) inventory investment is more sensitive to cash flow during the 1981-86 bust and the 1987-92 recovery than during the 1975-80 boom.


Issue Date:
1998-12
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/15560
Published in:
Journal of Agricultural and Applied Economics, Volume 30, Number 2
Page range:
363-377
Total Pages:
15




 Record created 2017-04-01, last modified 2017-08-23

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