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The Relationship of Income and Human Capital to Debt/Asset Ratio of Farm Families
Author(s) -
Marlowe Julia,
Godwin Deborah
Publication year - 1988
Publication title -
home economics research journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.372
H-Index - 31
eISSN - 1552-3934
pISSN - 0046-7774
DOI - 10.1177/1077727x8801700110
Subject(s) - asset (computer security) , debt , debt ratio , human capital , capital adequacy ratio , economics , capital asset , debt to capital ratio , sample (material) , business , actuarial science , demographic economics , finance , return on equity , economic growth , profitability index , equity ratio , microeconomics , profit (economics) , chemistry , computer security , chromatography , computer science
Financial well‐being of farm families is often defined in terms of their debt‐asset ratio. This study utilized the human capital theory to determine variables which predict debt/asset ratio by analyzing 489 farm families in seven states in the South and Midwest. Respondents answered a mailed questionnaire in 1985. The human capital approach was supported with key human capital variables, number of years farming, and husbands' education as predictors of debt/asset ratio. Total family income was found to have a curvilinear relationship with debt/asset ratio. Total income and region of country were also significant predictors. Discriminant analysis correctly classified almost 60 percent of the sample into three financial categories: safe, moderately risky, and risky.