Joseph A. Atwood

Examining Quantity and Quality Effects of Restricting Nitrogen Applications to Feedgrains

Restricting the timing and level of nitrogen applications has been proposed as a response to nitrate contamination in Nebraska. Agronomic research indicates that reducing available nitrogen reduces both the yield (quantity) and protein content (quality) of feedgrains. A differential system is developed to estimate the social costs of regulation while simultaneously considering both quantity and quality effects of a tax and/or a rationing policy. The results indicate that ignoring the quality effects of a proposed policy can lead to erroneous estimates of changes in factor use, output responses, and the social costs of regulation. Copyright 1998, Oxford University Press.

Relevancy of cash flow in firm financial management

The inadequacies of assessing business performance and credit worthiness by short run cash flow under conditions of inflation are stressed in this article. Because of the economic nature of traditional loan amortization, short-run cash flow cannot be relied on in gauging: (1) true business performance and (2) long-run repayment capacity. In addition, standard financial performance ratios using nominal flows are shown to be inadequate under inflationary conditions. This article stresses that business performance and credit worthiness analysis should be based on a real monetary basis. An example is provided to demonstrate the necessary modifications of nominal business flows to place the financial analysis on a real basis.