This study examines the variability in financial performance among EU meat producers, emphasizing liquidity and trade credit dynamics alongside equity leverage in medium-sized firms. Data from approximately 2,200 medium-sized meat producers were sourced from the Orbis financial database by Bureau van Dijk. Key metrics, notably the liquidity quick ratio and average trade credit duration, were analyzed across various firm cohorts to evaluate pandemic impacts on profitability.
The methodology employed is the two-way fixed effects' heterogeneous difference-in-differences framework, incorporating staggered interventions and cohort exits.
Results indicate that meat producers with higher equity ratios and liquidity (quick ratio >1.50) showed greater resilience during the pandemic, while those with lower equity and liquidity (quick ratio <1.00) faced heightened challenges. Additionally, longer trade credit durations positively influenced return on assets, particularly when liquidity was favorable, whereas positive trade credit utilization correlated with stagnant or declining return on sales.
This study pioneers the methodology employed with agribusiness financial data, which involves applying two-way fixed effects heterogeneous difference-in-differences with cohorts of companies. Key findings indicate that medium-sized meat producers exhibiting elevated liquidity levels throughout the pandemic, which also demonstrated a willingness to accommodate their clients by postponing invoice payments, were able to sustain superior profit margins compared to their EU counterparts.
