In the international literature, the subject of the analysis of the cost of production is often confined to the analysis of short-term convenience. However, the quantification of the cost of production per unit of product has a particular importance in the processing enterprises, especially in the initial phase of choice that concerns realization of investments in facilities and technologies to improve productivity. About this general theme, the research applies the Life-Cycle Cost (LCC) approach to quantify the cost of production in the long-term operation in the processing of pig meat in the Parma PDO ham sector. The research considers not only the analysis of a single good or service such as a plant or a building, which is what frequently appears in LCC application, but also the quantification of the cost of an industrial production, in its whole cycle, during a long-run period. The research applies the LCC approach to a sector with high capital intensity for a typical food production. In the research, the application of the LCC shows that innovative firms that have made investments to improve business efficiency, have lower production cost in the long run; these firms are able to gain efficiency in the production cycle, as result of the investments made to reduce production costs, calculated applying LCC approasch. It then can be stated that the LCC approach represents a useful tool for analysis of convenience-cycle management of companies not only in the short period but even in the long run, particularly those operating in sectors with high capital intensity and with a long payback period of investments in fixed capital, as considered in the research. Moreover, it could be useful to deep the analysis applying the suggested LCC approach to a larger sample, even in other sector, to verify the usefulness of the LCC application in quantifying whole life cost.

INTEREST COVERAGE RATIOS (ICRs) AND FINANCIAL SUSTAINABILITY: APPLICATION TO FIRMS WITH BOVINE DAIRY LIVESTOCK

Agri-food companies play an economic, social, and environmental role. In Italy, the typical products protected by the European Union with the PDO and PGI marks are spread throughout the national territory, even in disadvantaged ones, and generate turnover, employment, and positive effects in related industries. These companies are often of medium or small size (SMEs) and are financially constrained. The research applies the assessment of financial sustainability to the balance sheet statement (BSS), financial ratios (FRs), interest coverage ratios (ICRs), duration of the cash conversion cycle (CCC), and net working capital (NWC) data. It shows that companies in the sector have high capital intensity in both the fixed asset (FA) and NWC cycles. Profitability is largely eroded by the cost of debt (COD). Financial sustainability is calculated through the following: (1) the duration of the cash conversion cycle (CCC), broken down into the cycle lengths of inventory, receivables, and payables; (2) the calculation of the income and financial margins generated by the management and their correlation; (3) the calculation of financial ratios (FRs) and the verification of financial leverage (ROA > ROD); (4) the calculation of income and financial interest coverage ratios (ICRs) and tests on the significant differences between them. The application of ICRs with the financial methodology applied in the research makes it possible to (1) improve the assessment of financial sustainability and reduce the related risk and (2) reduce the information asymmetry between the company and the bank, facilitating access to credit. The duration of the CCC is negatively correlated to profitability (ROE), while size and economic performance are positively correlated. The ICRs (interest coverage ratio) calculated with the financial approach are statistically different from the ones calculated with the economic one. The application of the result is relevant to industry operators and for future research. The research is replicable; the results can be tested on other sectors of the agri-food sector and disseminated to operators.

Profitability and Financial Sustainability Analysis in Italian Aquaculture Firms by Application of Economic and Financial Margins

The objective of this article is to develop and apply a specific discounting cash flow (DCF) approach to evaluate investment in renovation to improve building quality, thus increasing energy efficiency. In this article, we develop and apply a specific net present value (NPV) and an internal rate of return (IRR) approach to quantify the value created for the owners of the building by the investment in renovation via energy-saving investments that produce positive externalities. The model has an applied interest because, in recent years, a lot of investments in real estate were made by owners in order to increase the green quality of the buildings, and several funds of public aid were provided by the government to stimulate these energy-saving investments. The model proposed here is applied to a case study of a 16-apartment building located in northern Italy considers the model attempts to quantify the initial investment value, the energy savings, the tax deduction of the initial investment and the terminal value of the investment as the increase in building value. The analysis shows that the model is consistent in evaluating investments to improve building quality, and investments within the context of the specific case study considered in the research have IRRs ranging from a minimum of 4.907% to a maximum of 12.980%. It could even be useful to consider a sample of cases to verify whether our results are representative of this specific case study. The model could represent a useful tool for consumers in evaluating their own investments in building renovation, from a stand-alone perspective and even by comparing them with other types of investment. The research could be developed in the future to quantify the social welfare generated by public spending via tax deductions to reduce the costs of investment in energy savings for buildings and could even be applied to new real estate projects in comparing different construction technologies and even comparing the return of renovation investment with other investments not even in the real estate sector.

Pork meat in Italy is one of the largest agri-food chains in Italy. In the swine production chain, slaughter plays an important role, because it has an impact on animal welfare, food safety and the sustainability of the agri-food chain. These companies also deal with pigs destined for typical Denomination of Origin products and therefore play an important role in the production chain of typical products and in the field of EU agricultural policy. In this context, the research aims to analyze the economic sustainability of the major pig slaughter firms in Italy, through data analysis of the annual account statement (AAS) on a sample of eight companies analyzed over a ten-year historical series. Financial ratios and margins (FRM) analysis is applied in the research. FRM analysis shows that firms have the largest absorption of financial resources in the net working capital cycle. The research highlights the high incidence of raw materials in companies in the sector. Consequently, the profit margins of the companies in the sample are modest and in some cases are lower than the cost of debt, suggesting a moderate capacity to attract capital. This result appears as a negative signal of the economic sustainability of the companies in the sector. The research, now limited to a small number of large companies, opens a line of research that can be developed by expanding the sample to small and medium-sized enterprises of the chain of Denomination of Origin hams in Italy to suggest improvement interventions, in particular for rural or marginal areas of production.