The Concept of Financial Sustainability Measurement: A Case of Food Companies from Northern Europe

Abstract

A managerial approach to the financial sustainability of a company derives from the principle of value maximization for shareholders at an acceptable level of risk, using the best combination of investments and available sources of financing. The research presents the concept of financial sustainability measurement in the example of food companies from Northern Europe. We applied fuzzy logic to quantify complex interrelations among various financial factors and classify companies according to the level of their financial sustainability. A unique combination of factors formed a single complex indicator, which measured a relative level of financial sustainability of food companies. Considering the duality of financial sustainability in terms of risk and return, the relationship framework for synthetic evaluation included the vector of value and the vector of continuity that consisted of such variables as profitability, market capitalization, productivity, operating efficiency, debt, liquidity, interest coverage, and retained earnings. We received evidence that the level of financial sustainability of entities changed in 2005–2015 and was statistically different among sample companies. The proposed method can be applied as a practical tool in a decision-making process to evaluate financial sustainability or other aspects of business performance in larger groups of entities on the basis of various financial criteria.

Differences in the Cost of Capital: The Case of Food Companies From Emerging and Developed European Economies

“…Food companies vary from other industries by the business cycle, investors' behaviour, and institutional environment [Zabolotnyy and Wasilewski 2019]. The food industry is characterized by slower adjustment to the production cycle and operation conditions of an agro-natural basis related to natural properties of plant and animal growth.…”

Agrifood Chains as Complex Systems and the Role of Informality in Their Sustainability in Small Scale Societies

“…At face value, the word 'sustainability', as a noun, means "a process or state [that has] the ability to continue or be continued for a long time" [24]. In an effort to be more precise, variants on this definition have been developed and argued over for many years: environmentalists see sustainability as a way of using natural products and energy without harming the environment, especially by replacing what has been used [25]; businesses see sustainability primarily from a financial perspective, namely a business's financial ability to continue to make a profit and provide services over time with minimum risk [26]; social scientists regard sustainability as primarily about human-based activities-this is the least clearly defined of the sustainability definitions. It includes a mix of human well-being and equity, access to basic needs, fair distribution of income, good working conditions and decent wages, equality of rights, inter-and intra-generational justice, access to social and health services and to education, social cohesion and inclusion, empowerment and participation in policy-making [27].…”

Breaking food safety and quality standards in the EU: Financial aspects within poultry products manufacturers in Visegrad 4 countries

“…Analysis of categorical influencing factors of selected industry branch poultry meat and poultry meat products (EU NACE 1012) is using financial performance indicators total assets turnover, profit margin and efficiency of cost of employees. Zabolotnyy & Wasilewski (2019) consider the operating efficiency to be an influencing factor of financial health for the analysis of large companies. Due to a fact that food manufacturers enter the common EU market, authors consider the comparison of small, medium and large businesses as suitable by using the same set of financial ratios, namely indicators of activity, profitability and also efficiency.…”