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Analysis of the Risk of Bankruptcy of Tomato Processing Companies Operating in the Inter-Regional Interprofessional Organization “OI Pomodoro da Industria Nord Italia”

1
Department of Civil Engineering, Environment, Territory and Architecture (DICATeA), University of Parma, 43124 Parma, Italy
2
Department of Veterinary Science, University of Parma, 43126 Parma, Italy
3
University of Buenos Aires, Buenos Aires C1417DSE, Argentina
*
Author to whom correspondence should be addressed.
Sustainability 2018, 10(4), 947; https://doi.org/10.3390/su10040947
Received: 15 February 2018 / Revised: 15 March 2018 / Accepted: 22 March 2018 / Published: 24 March 2018
(This article belongs to the Section Economic and Business Aspects of Sustainability)
The tomato sector is a major area of agricultural activity in Italy; tomato production and processing characterize different Italian regions; in particular, there are two production districts, one in southern Italy and one in northern Italy, in the Po Valley. In recent years, processing firms have encountered increasing difficulties, due both to an increase in raw material costs and market difficulties. Tomato processing firms are often characterized by significant investment in fixed assets and working capital, with an ensuing increase in equity or debt financing, which increases the risk of bankruptcy, as has happened to many firms in the sector in recent years. Therefore, the aim of this research was to analyze the financial sustainability of tomato processing firms by applying financial ratios. To achieve this goal, this research focused on the annual data of a sample of 17 tomato processing firms operating in the Inter-regional Interprofessional Organization, “OI Pomodoro da Industria Nord Italia”. The firms were divided into still-active (not-distressed) and failed (distressed) firms, with the aim of analyzing the differences between the financial data and management practices of the two groups. The data suggest that larger firms, with an adequate financial structure, have been able to withstand the tomato market crisis in recent years, whereas distressed firms are on average smaller and suffer from higher recourse to debt capital and lower profit margins than not-distressed firms. This research could be applied by entrepreneurs, managers, bankers and public operators to define good management practices that should be achieved and measured with financial ratios, even as a means of reducing the risk of distress for firms operating in the tomato sector. This research highlights that financial ratios could be usefully applied for predicting the continuity of activity and therefore the sustainability of the management cycle, including its relationship to the whole socio-economic system over time. View Full-Text
Keywords: interprofessional organization; “OI Pomodoro da Industria Nord Italia”; tomato processing firms in Italy; bankruptcy; distressed firms; financial sustainability; management cycle interprofessional organization; “OI Pomodoro da Industria Nord Italia”; tomato processing firms in Italy; bankruptcy; distressed firms; financial sustainability; management cycle
MDPI and ACS Style

Iotti, M.; Bonazzi, G. Analysis of the Risk of Bankruptcy of Tomato Processing Companies Operating in the Inter-Regional Interprofessional Organization “OI Pomodoro da Industria Nord Italia”. Sustainability 2018, 10, 947.

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