BUSINESS SUCCESS: WHAT FACTORS REALLY MATTER?



Table 6. Financial Factors and Correlation to Success for All Livestock** Operations

Factor

Rank

Correlation

t-statistic*_________________

Expense / Receipts

1

-0.721

6.986

Debt / Assets

2

-0.678

6.192

NCFI / Acre

3

0.625

5.365

Real Estate Investment / Acre

4

0.332

2.363

Crop Receipts / Acre

5

-0.241

1.669

Interest Exp / Receipts

6

-0.241

1.667

Long Term Debt / Acre

7

0.223

1.538

Off-Farm Income

8

0.213

1.464

Depreciation / Receipts

9

0.210

1.443

NCFI Standard Deviation

10

-0.168

1.145

Family Living Expense

11

-0.140

0.946

Intermediate Term Debt / Acre

12

0.126

0.852

Equipment Investment / Acre

13

-0.123

0.833______________

*Bold t-statistics are significant at 95%

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

Table 7. Financial Factors and Correlation to Success for All Diversified** Farms

Factor

Rank

Correlation

t-statistic*________________

NCFI / Acre

1

0.612

5.364

Expense / Receipts

2

-0.546

4.515

Debt / Assets

3

-0.284

2.050

Family Living Expense

4

-0.225

1.600

NCFI Standard Deviation

5

-0.211

1.498

Off-Farm Income

6

0.181

1.276

Interest Exp / Receipts

7

-0.146

1.021

Real Estate Investment / Acre

8

-0.119

0.827

Intermediate Term Debt / Acre

9

0.070

0.487

Depreciation / Receipts

10

-0.048

0.330

Long Term Debt / Acre

11

0.044

0.307

Equipment Investment / Acre

12

-0.033

0.226

________________________Crop Receipts / Acre_________

13

0.017

0.116______________

*Bold t-statistics are significant at 95%

**Farm can not be classified as primarily crop or livestock

The level of real estate investment per acre is only a significant factor for livestock
operations, and in that group the intensity of investment ranks as the fourth most important
factor. The correlation is positive suggesting that the livestock ranches with highest valued land



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