Connection between Financial Analysis and Current Settlements of Accounts

Szálteleki, Péter – Pupos, Tibor – Szabó, Gergely

Keywords: subsidies for development, accruals, indicators for capital, financial situation and profitability, algorithms for calculations, Q12, Q14

Under market-oriented economy conditions, stake holders and other concerned parties have a need for objective information on capital, financial situation and profitability of entities. The way of this is even governed by law. Some of this information can be shown by financial indicators.
The commonly used financial indicators are not few in number, however their set is not uniform concerning definitions and algorithms for calculation. An important requirement on the calculated indicators is that they must provide reliable information. It is only possible to ensure this if it is known what is calculated and why. Calculating indicators cannot be an automatic procedure, because of the continuously changing economic conditions and connecting regulatory system.
This paper answers the question, how the current settlements of accounting government subsidies influence the capital and financial situation, the information content of financial indicators covering profitability. These analyses are based on economic records and the database of the Farm Accountancy Data Network (FADN; 2014-2016) of the Research Institute of Agricultural Economics. On the basis of the results suggestions are developed for the algorithms of calculating certain indicators. This is necessary because the algorithms applied so far do not ensure the suitable professional information content considering the current accounting law.

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