Fedotova M.A.Ulyanovsk State Agricultural Academy named after P.A. Stolypin, Ulyanovsk, Russian Federation fed_mar@mail.ru
Importance The article overviews financial risks of agricultural entities and their classification. Objectives The research pursues analyzing industry specifics of financial risks and their mitigation in agricultural entities. To find the key factors causing the financial risk, it is necessary to determine the nexus of capital structure and corporate financial standing and identify conditions for profit growth. Methods To assess financial risks of agricultural enterprises, their industry specifics should be taken into account. The research analyzes the nexus of capital structure and financial position, relying upon data of 200 agricultural entities from different areas of the Ulyanovsk region. Results We find aspects arising from static relationship of corporate capital structure and financial position, and, in particular, solvency, business activity as identified by the analytical grouping method. The research determines conditions for growth in profit, in particular, optimization of production costs, effective use of corporate resources, and technological improvement of fixed assets that would drive the growth in quality and competitiveness of agricultural products. The financial position and financial risks also depend on the State's involvement in funding of agricultural entities' reproduction processes and formation of the production potential. Budgetary finance of highly debt-laden agricultural enterprises is doubtful in the current circumstances, since budgetary funds should be utilized efficiently, i.e. ensure an increment in production. This explains so low budgetary subsidies for unprofitable enterprises. Conclusions and Relevance The financial risk of the agricultural enterprise should be defined as a specific type of identifiable uncertainties arising from the industry specifics and operations of a business entity in the current market conditions that influence processes of financial cash flows. The conclusions are valid and corroborated with assessments. They may be useful in strategic planning of finance sources and areas for allocating financial resources in order to mitigate aggregate financial risks.
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