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The Degree of Financial Leverage in the Farm Sector: A Measure of Financial Stability

机译:农业部门的财务杠杆程度:衡量金融稳定性的指标

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The degree of financial leverage measures the percent change in residual farm earnings that results from a 1-percent change in earnings before interest and taxes (EBIT). As such, it is an elasticity and is a useful index of the stability of residual farm income. The degree of financial leverage in the farm sector has been increasing rapidly since 1976 in spite of a declining debt-to-asset ratio during the middle and late seventies. The total risk in the farm sector has increased during the seventies due to higher business risk and the rising degree of financial leverage.

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