BUSINESS SUCCESS: WHAT FACTORS REALLY MATTER?



The same procedure was used to rank the factors for each of the three types of producer
groups. Tables 5, 6, and 7 contain the factor rankings for crop, livestock, and diversified
operations. The top three factors for all farms also rank high for the production specific groups,
but a few differences are revealed in the different groups. The standard deviation of the net cash
farm income has a significant positive correlation to success for crop farms and ranks as the
fourth most important factor. However, the same risk measure is not a significant factor for
livestock or diversified operations.

Table 5. Financial Factors and Correlation to Success for All Crop** Farms

Factor

Rank

Correlation

t-statistic*

Expense / Receipts

1

-0.447

8.305

NCFI / Acre

2

0.372

6.663

Interest Exp / Receipts

3

-0.278

4.808

NCFI Standard Deviation

4

0.249

4.279

Debt / Assets

5

-0.244

4.188

Crop Receipts / Acre

6

0.166

2.800

Intermediate Term Debt / Acre

7

0.083

1.382

Off-Farm Income

8

-0.082

1.364

Real Estate Investment / Acre

9

-0.078

1.299

Depreciation / Receipts

10

-0.056

0.930

Long Term Debt / Acre

11

0.046

0.766

Family Living Expense

12

-0.013

0.217

Equipment Investment / Acre

13

0.009

0.146______________

*Bold t-statistics are significant at 95%

**Crop sales account for more than 75% of all farm receipts



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