Comparison of different ways to measure profitability in the Uruguayan agricultural sector through longitudinal clusters




longitudinal clusters, agricultural companies, profitability (ROA)


The use of ROA (Return on Assets) as a profitability indicator is widespread in financial literature; however, there is no agreement on the economic result to be used as a basis for calculation. In the agricultural sector, where financing and land costs are high, the problem takes on great relevance to interpret the economic reality of the farm companies. The study has two objectives: a) to discuss the relevance of using operating ROA —based on economic results without deducting financial and land leasing costs— and financial ROA —which does deduct them— in measuring the evolution of agricultural business profitability; and b) to verify if there are groups of companies that regardless of how their profitability is measured present clear similarities in their evolution. The theoretical framework supporting the use of these indicators is analyzed first, attempting to discern which aspects of profitability they attempt to measure. Then, the results of both indicators are compared in a dynamic analysis using longitudinal cluster methodology on a database composed of the Financial Statements of 713 Uruguayan agricultural companies in the 2010-2017 period. It is concluded, first of all, that there are no relevant differences in the way firms' profitability evolves, whether measured by operating or financial ROA. Secondly, the evidence shows that most firms can be classified into three groups where internal profitability has evolved similarly, regardless of how it is measured, two of them with notable differences in the rate of profitability and some differences in the speed of change of that rate.


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How to Cite

Kuster C, Álvarez J, Lezcano M, Álvarez-Vaz R. Comparison of different ways to measure profitability in the Uruguayan agricultural sector through longitudinal clusters. Agrocienc Urug [Internet]. 2023 Apr. 10 [cited 2023 Jun. 6];27:e1023. Available from:



Social Sciences, Rural Sociology and Agricultural Economics
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