Financial Performance Analysis of Corn-based Ethanol Enterprises in the U.S.

Abstract

The objective of this study is to examine the state of financial conditions of the corn-based ethanol enterprises in the U.S. from 2009 to 2014. Ethanol enterprises are categorized as small, those producing up to 50 million gallons per year (MGY) and large producing between 50 and 100 MGY. Panel data from the annual financial reports submitted to the Securities and Exchange Commission (SEC) are used to calculate the financial ratios of profitability, asset turnover, leverage, liquidity and operating margin. Results show that the corn-ethanol enterprise is moving into the direction of positive returns of investment. Associated factors for the profitability are found to be operating margin ratio, liquidity, leverage ratio, and subsidy. Findings of this study have an implication to the development of the cellulosic ethanol enterprise, which suggests the utilization and valuation of its co-products for revenue generation to improve economic financial success.