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Efficient agricultural production is not only an essential prerequisite for successful development of rural territories and food processing industry but also an important factor in providing employment and stability of national economy. The creation of high value added by agrarian sector substantially contributes to the growth of economic prosperity of rural population. This study aims to explore the efficiency of Latvian agricultural production at micro (farm) level measured by value added in the context of selected EU member states. All the calculations were performed by the authors and were based on data for the years 2007-2013 which had been obtained from the public databases of Farm Accountancy Data Network and SUDAT. An examination of the proportion of farm net value added to annual work unit has revealed that the Baltic States still belong to the lowest ratio group compared with the EU average. Latvian field crops farms were in a particularly difficult economic situation. In comparison with the EU average, the ratio of farm net value added per 1 hectare of utilized agricultural area was the smallest in the EU. In Latvian dairy farms the ratio of farm net value added per 1 livestock unit to the EU average was much higher and achieved approximately 70%. However, it still was not as high as for farms in neigbouring Baltic countries where the ratio was roughly the same as the EU average. Latvian farms also remained among the most heavily subsidized agricultural holdings in the EU. In agrarian sector the proportion of production subsidies in farm net value added was two times higher than the EU average. A growing dependence of farms on subsidies manifests deteriorating competitiveness of agrarian sector. This trend could be reversed by introducing innovative forms of production process, modernizing technology and learning from experience of other EU member states, particularly, of Scandinavian countries which have similar or even more adverse climate. [ABSTRACT FROM AUTHOR]

Small and medium enterprises play an important role in the development of national economies both in developed and developing countries. Consequently, effective financial and business management of these companies could be considered a prerequisite of sustainable economy. In comparison with large corporations, small businesses have different financial goals and characteristics resulting in the need for different financial techniques and sources of funds. The study aims to explore financial management practices in small businesses and to contrast them with techniques used by large companies. The research object is financial management practices in small companies, changes of and main trends in their development. It has been revealed that usually financial management practices in small companies depend on the stage of their development. Small businesses are inclined to preparing capital budgets by necessity unlike large companies which have annual budgets. Traditionally, small companies are reluctant to use newer and more sophisticated financial management techniques and practices. Although over the years the popularity of such methods as discounted cash flow has increased, the percentage of small companies using them is lower compared with large companies. Few small companies adopt traditional formal approach to working capital management. Instead, they give preference to subjective working capital decision-making. The majority of small businesses concentrate just on one area of working capital management (cash, stock or debtors) and the minority do not manage any area. The maximization principle of available amounts of cash instead of its skilful short-term investment as well as poor control over receivables are believed to be a really acute problem. In comparison with large companies, cash balances of small businesses are proportionately higher. Many small companies still use manual methods of stock control and the majority does not adopt any stock optimization methods at all. [ABSTRACT FROM AUTHOR]