Does Biological Assets´ Tangibility Matter from the Profitability and Cost of Debt Perspective for Agricultural Firms?

The research aim is to identify specific production factors (biological assets) and target potential profitability and cost of external debt dependency on these biological assets (as an anticipated essential driving forces) due to relative scarcity of this topic coverage. Underlying unbalanced data set consist of 229 agricultural firms managing their business operations from 2011 till 2019 in the Czech Republic. The paper is innovative based on its combination of several different factors including incorporation of biological assets’ variables influencing firm’s profitability and by assessing determinants concerning cost of external debt using a panel regression analysis with fixed effects. Biological assets tangibility is relatively low with declining trend. Contrary to it land tangibility experienced exactly opposite development caused by "skyrocket" land price appreciation. It has been proven that cost of debt is depending only on the short/long-term leverage levels, thus primarily the total indebtedness is essential and relevant driving force.