THE EFFECTS OF EQUITY-FINANCED LONG-TERM ASSETS ON LIQUIDITY IN THE AGRICULTURE SECTOR OF TURKEY

Abstract

This study aims to conduct a typical regression methodology on the long-term data of the agriculture sector in Turkey. The regressive model represents current ratio as the dependent variable, and it uses the ratios of short-term liabilities on total liabilities, bank credits payable in the short-term on short-term liabilities, bank credits payable in the long-term on total assets, and long-term assets on (shareholders’) equities as the independent variables. The tests are executed by using the averages of aggregate totals of the businesses from all scales in the sector in three years’ averages from 1998 until 2016. The findings statistically ensure and depict that the framework indicator of liquidity or the famous current ratio depends not only on the bank credit used or the level of short-term liabilities, which is not surprising, but also on the ratio of long-term assets on equities. If the businesses enrich their equities level in financing of long-term assets, the liquidity favors. The independent variable of long-term assets to equities ratio, which rather reflects the long-term movement of current ratio better than the other variables, deeply affects the level of better liquidity as significantly as other control variables of the study. As a conclusion, better liquidity could profoundly be a lagging result of better equity-type financing of the total assets. The outcomes of the study will expectedly signal the decisions and policies of agriculture sector in Turkey by the long-term evidence presented here.