Efficiency Analysis of the Broiler Integration Project Using the DEA Model and Ratio Analysis

Purpose: This study aims to find ways to improve efficiency of integrated broiler businesses using ratio analysis of their business and financial status through analyzing the business efficiency of the broiler integration project that faces the paradigm shift including national income improvement, change in the quality of life and consumer needs, and recognizing the problems in inefficient integrated broiler businesses. Research design, data, and methodology: The ways to recognize and improve the problems are sought through analysis of the efficiency factors of integrated entities using the DEA model of the broiler integration project and ratio analysis. For ratio analysis, an analysis related to input and output variables of DEA is selected, and the debt ratio of safety, current ratio of liquidity, the operating profit to sales ratio of profitability, asset growth rate of growth potential and total asset turnover of efficiency analyzed, eventually compared with the DEA efficiency. 23 companies with a high degree of integration in the status of slaughterhouses and oil collection facilities were selected, and analyzed using the audit reports on officially disclosed 2019 financial statements. Results: DEA analysis shows 4 companies were efficient, and returns to scale were shown to be 5 companies with IRS, 14 companies with DRS, and 4 companies with CRS. Ratio analysis indicates the stability, liquidity, profitability and efficiency ratios were low in the integrated broiler businesses, and their growth potential ratio was higher than the manufacturing average. Implications: This study measured the efficiency through the DEA model for domestic integrated broiler businesses, and thus analyzed efficient and inefficient entities using calculated efficiencies. Improvement in excessive input and insufficient output in inefficient entities, and leveling of efficiency will lead to the growth of the integrated broiler industry sector. Furthermore, increasing the sales of inefficient entities will stabilize their low operating profit margins.