Table of Illustrations
Table 1: Subsidies and recurring net profit before tax in
France per farm, in K€Source: FADN (RICA) 16 Table 2: Assumptions and
recommendations of the 129 books that assume that REP = EEP. Source:
Fernandez 2010 21
Table 3: Equity premiums recommended and used in textbooks.
Source: Fernandez 2010 22
Table 4: Historical Equity Premium for the French market 23
Table 5: Historical Equity Premium for small and micro-cap 24
Table 6: Market capitalization effect on the beta for
micro-capitalization 26
Table 7: Primary data for the analysis of farms' results in
Isère 29
Table 8: Cost of each labor unit per month for the SMIC 30
Table 9: Social security contributions 31
Table 10: Groups of debt level 32
Table 11: Number of companies studied for the Beta estimation.
Source: Bloomberg 35
Table 12: Age and gender of the respondents 36
Table 13: answers to question 4, 5 and 6 36
Table 14: Answers of question 7: «how do you choose the
discount factors you use?» 37
Table 15: Answers of question8 «what discount factor do
you use usually for your customers? (ex given: 11%)» 37 Table 16: Answers
of question 9: «If you were proposed a tool to estimate the WACC of the
farms of your region to use it as a discount factor, how would you consider
this tool?» 37 Table 17: Results of the Mood's median tests summary for
ROE by groups of leverage for each years
43
Table 18: Weighted average ROE for all specialization and by
years 44
Table 19: Average ROE by specialization and by group 44
Table 20: results of the Mood's median tests summary for ROA by
groups of leverage for each years
48
Table 21: Average ROA by specialization and by years 49
Table 22: Average ROA by specialization and by groups 49
Table 23: Calculation of the Beta for the grain specialization
(oilseed is considered as grain farming in
France). Source: Bloomberg 51
Table 24: Calculation of the beta for the cattle ranching and
farming specialization. Source:
Bloomberg 51
Table 25: Calculation of the beta for poultry and fruits &
vegetables Source: Bloomberg 52
Table 26: Summary of the beta for the different specialization
and regions Source: Bloomberg 52
Table 27: Characteristic of each specialization in Isère
*EBITDA/total annuity 53
Table 28: WACC estimation for each specialization (leverage is
based on table 27) 53
Table 29 : WACC estimation for each specialization for group 5 (0
to 20% leverage) 54
Table 30: WACC estimation for each specialization for group 2 (60
to 80% leverage) 54
Table 31: NPV of a refinancing operation to reduce the WACC and
increase the wealth of a dairy farm
59
Figure 1: The optimal amount of debt to reduce the company cost
of capitalSource: Principles of
Corporate Finance 12
Figure 2: Agricultural production in France, 2010 13
Figure 3: Agricultural production in Isère, 2010 14
Figure 4: The percentage of the EU budget allocated to the CAP
Source: Eurostat, in Clipici 2011 15
Figure 5: Historical Development of the CAP Source: Clipici E.,
2011 15
Figure 6: CAP spending evolution Source: DG Agri 16
Figure 7: Average asset value per farm by member state 2007
Source: FADN 17
Figure 8: Volatility of the price of wheat after application
of Agenda 2000Source: Offre et Demande Agricole 18 Figure 9: Fluctuation of
the share of agro-food exports by key countries in the global volume of
agrofood exports 18 Figure 10: Moving average (last 5 years) of the REP used or
recommended in 150 finance and valuation textbooks. Source: Fernandez 2010 22
Figure 11: Small firm premium (bottom 10% of market cap in US) between
1927-2010. Source:
Damodoran 2010 24
Figure 12: Number of farm for each specialization 30
Figure 13: Region of the CERFRANCE of the respondents 36
Figure 14: histogram of frequency for ROE 38
Figure 15: Histogram of frequency for ROA 39
Figure 16: Box and whisker plots with median notch for ROE by
year (means are shown with a red cross) 40 Figure 17: Box and whisker plots
with median notch for ROE by specialization (means are shown with a red cross)
40 Figure 18: Median ROE for each year and each group of leverage for dairy*
means significantly higher than ** 41
Figure 19 : Median ROE for each year and each group of leverage
for grain* means significantly
higher than ** 42
Figure 20: Median ROE for each year and each group of leverage
for cattle* means significantly
higher than ** 43 Figure 21 : Box and whisker plots with
median notch for ROA by years (means are shown with a red cross) 45 Figure 22 :
ROA for each year and each group of leverage for dairy producers* means
significantly higher than ** 46 Figure 23: ROA for each year and each group of
leverage for grain producers* means significantly higher than ** 47
Figure 24: ROA for each year and each group of leverage for
cattle farming* means significantly
higher than ** 48
Appendix 1: Illustration of the database extraction. File name:
"extraction 2006_1" 70
Appendix 2: Illustration of the database extraction, balance
sheet information. File name: "extraction
2006_2" 71
Appendix 3: Questionnaire 72
Appendix 4: Normality test of the datasets for ROE, extraction
from statgraphics 75
Appendix 5: Normality tests of the datasets for ROA, extraction
from statgraphics 77
Appendix 6: ROE by year 79
Appendix 7:ROA by year 84
Appendix 8: ROE by groups for dairy production 89
Appendix 9: ROE by groups for cattle specialization 95
Appendix 10: ROE by groups for grain specialization 99
Appendix 11: ROA by groups for dairy specialization 103
Appendix 12: ROA by groups for cattle specialization 107
Appendix 13: ROA by groups for grain specialization 111
Appendix 14: Cost of debt for farms of Isère 115
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