Papers by Markku Penttinen
Acta Oto-Laryngologica, 1997
The cell adhesion molecule syndecan-1 expression is induced during keratinocyte differentiation a... more The cell adhesion molecule syndecan-1 expression is induced during keratinocyte differentiation and reduced during the formation of squamous cell carcinomas (SCCs). A significant correlation between decreased syndecan-1 expression in head and neck SCC measured from frozen sections with immuohistochemical methods and clinical outcome are reported. The clinical relevance of the cellular proliferation marker Ki-67 is controversial in SCC of the head and neck. The purpose of this study was to determine the expression of syndecan-1 and Ki-67 in SCC of the larynx and correlate the results with known prognostic factors and clinical outcome. Paraffin-embedded samples of 100 patients with laryngeal SCC (44 glottic, 36 supraglottic, 20 transglottic) treated at Turku University Central Hospital were re-examined and divided into four histological grades of differentiation, four grades of keratinisation, and four grades of 104-9 (syndecan-1) immunostaining. The mitotic index was analysed as the number of mitoses per volume corrected high power fields. The relative number of Ki-67 positive cells was evaluated. The patients mean age was 64 years and the 5-year survival was 69%. In univariate analysis, intermediate or strong staining for syndecan-1 was associated with higher overall survival than those tumours with no or little syndecan-1 expression (p = 0.048). Nodal status (p = 0.0001), tumour size (p = 0.0004) and localisation (p = 0.0008), general condition (p = 0.0001), histological grade (p = 0.02) and patient age (p = 0.03) correlated with overall survival whereas the Ki-67 index (p = 0.093), mitotic index (p = 0.23) and grade of keratinisation (p = 0.90) failed to do so. The results suggest that syndecan-1 could be a useful prognostic factor in SCC of the larynx.
Economic Science for Rural Development, 2009
Global competition has caused the forest industry to outsource many phases of wood harvesting to ... more Global competition has caused the forest industry to outsource many phases of wood harvesting to forest machine entrepreneurs. Poor profitability, low liquidity, and solvency of the harvesting business have led to difficulties in hiring qualified operators. The asymmetry of negotiation powers between industrial customers and entrepreneurs maintains low profitability. Consequently, few entrepreneurs have been able to develop their businesses, although some interesting exceptions do arise.
The financial data of 1 000 logging enterprises operating in 2007 were analyzed for the period 2001-2007. Two-thirds of enterprises were small, operating one or two machines, but they produced only one-third of the total turnover. The ratio analysis focusing on profitability, liquidity, and solvency reveals economic problems in a
quarter of the enterprises. High debts, and to some extent high levels of investments, have negative effects on profitability. The reserves needed to develop operations are very small in general and nil in the smallest enterprises. Entrepreneurs need managerial skills and appropriate business tools to cope with the problems of staying in the business, especially concerning the growth of their enterprises.
Scandinavian Forest Economics, 2004
Forest evaluation causes the greatest problems in farm accounting because it requires exact, up-t... more Forest evaluation causes the greatest problems in farm accounting because it requires exact, up-to-date information concerning growing stock and bare forestland. Moreover, the changes in forest property value caused by the fluctuation in stumpage prices affect both the balance sheet and even the profit and loss statement, and thus all forest profitability measures from annual net profit to various ROI measures. While the evaluation of merchantable stands can be based on market prices, the evaluation of unrealizable property, such as seedling stands, as well as young and middle-aged stands, is imprecise.
In 2002, the European Union (EU) accepted the International Accounting Standards (IAS) Jdecree, which presumes that publicly quoted enterprises provide their concern financial statements according to the International Financial Reporting Standards (IFRS)1 in 2005 at the latest. The forest industry corporations such as Stora Enso, UPM Kymmene, and the M-real group are considerable forest owners and have to apply IFRS decree and IAS regulations as well. The IAS 41 came into force at the beginning of 2003 (IAS 2002). This standard requires that the biological property of public enterprises on the stock exchange has to be evaluated by a fair value, which can be defined in terms of market prices at the time of felling and marketing expenses. However, evaluation by a fair value must not be made if the value cannot be measured reliably. The value of seedling stands, as well as young and middle-aged stands, can be based on yield value, such as net present value (NPV), which is calculated by discounting the incomes and costs. The interest rate used is defined in the IAS by the Yrisk-freeC rate. Although the IAS does not bind enterprises outside the stock exchange, there are reasons for other enterprises even on farms to adopt its practices.
The value of the whole growing stock has been divided into inventory and fixed assets in the balance sheet. The inventory value of the marketable stand is based on an allowable cut calculation that estimates the total number of felling opportunities when only forest law limitations have been included. The change in forest value also affects the profit and loss statement. The IAS therefore causes unrealistic fluctuations in net profit. The yearly fluctuations of property values are caused by fellings, as well as the change in the growing stock, but especially by the changes in stumpage prices. This profit and loss statement volatility suggests that it would be advisable to perform sensitivity analyses and compare the evaluations obtained from different paradigms.
The forest management test material used in this research was collected from five bookkeeping farms. The farm profitability study is part of the EUCs The Trustees of the IASC (International Accounting Standards Committee) accepted in March 2001 a proposal to change the name of IAS-standards to IFRS-standards (IASC Foundation, Annual Report 2001).
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Farm Accountancy Data Network (FADN). In Finland, there are about 900 farms involved in this network. The economic data concerning forestry of the case farms comes from this bookkeeping. However, forest inventory data provided by the farms is based on their forest management plans (FMPs). Using up-to-date FMPs, the balance sheet can be calculated accurately enough, but over time the data will become obsolete. The value of the forest and its changes requires the growing stock to be updated. In addition to an FMP, knowledge of fellings and silvicultural activities is required. In this study, the applicability of a Finnish forest management planning software (MELA) is used for updating the forest inventory data.
. Meddelelser fra Skogforsk , Norsk institutt for skogsforskning, 1997
Helsinki School of Economics and Business Administration, Working Papers W-201. 39 pp., 1998
Accounting and Managerial Economics for an Environmental-Friendly Forestry, INRA. Économie et sociolotie rurales, Actes et Communications, 1997
Non-industrial private forest owners (NIPF owners) supply most of the roundwood in Scandinavia. F... more Non-industrial private forest owners (NIPF owners) supply most of the roundwood in Scandinavia. For these owners, it is the supply of timber that provides income and return on invested capital. Owners have to decide whether to invest more in their property, or to disinvest. They have to find ways to increase revenue and cut costs. By applying business accounting practices to traditional forest accounting we propose principles for profit and loss accounts and balance sheets for NIPF owners. We argue that it is important for the forest owner to complement the strictly regulated accounting with contingent adjustments. An economic analysis of a medium-sized forest holding illustrates the importance of this type of adjustment. Research on this question can help to increase economic awareness among private owners and to support the harmonization of forestry accounting in the EU.
International IUFRO Symposium, 9-11 May 2016, Vienna Austria, 2016
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Papers by Markku Penttinen
The financial data of 1 000 logging enterprises operating in 2007 were analyzed for the period 2001-2007. Two-thirds of enterprises were small, operating one or two machines, but they produced only one-third of the total turnover. The ratio analysis focusing on profitability, liquidity, and solvency reveals economic problems in a
quarter of the enterprises. High debts, and to some extent high levels of investments, have negative effects on profitability. The reserves needed to develop operations are very small in general and nil in the smallest enterprises. Entrepreneurs need managerial skills and appropriate business tools to cope with the problems of staying in the business, especially concerning the growth of their enterprises.
In 2002, the European Union (EU) accepted the International Accounting Standards (IAS) Jdecree, which presumes that publicly quoted enterprises provide their concern financial statements according to the International Financial Reporting Standards (IFRS)1 in 2005 at the latest. The forest industry corporations such as Stora Enso, UPM Kymmene, and the M-real group are considerable forest owners and have to apply IFRS decree and IAS regulations as well. The IAS 41 came into force at the beginning of 2003 (IAS 2002). This standard requires that the biological property of public enterprises on the stock exchange has to be evaluated by a fair value, which can be defined in terms of market prices at the time of felling and marketing expenses. However, evaluation by a fair value must not be made if the value cannot be measured reliably. The value of seedling stands, as well as young and middle-aged stands, can be based on yield value, such as net present value (NPV), which is calculated by discounting the incomes and costs. The interest rate used is defined in the IAS by the Yrisk-freeC rate. Although the IAS does not bind enterprises outside the stock exchange, there are reasons for other enterprises even on farms to adopt its practices.
The value of the whole growing stock has been divided into inventory and fixed assets in the balance sheet. The inventory value of the marketable stand is based on an allowable cut calculation that estimates the total number of felling opportunities when only forest law limitations have been included. The change in forest value also affects the profit and loss statement. The IAS therefore causes unrealistic fluctuations in net profit. The yearly fluctuations of property values are caused by fellings, as well as the change in the growing stock, but especially by the changes in stumpage prices. This profit and loss statement volatility suggests that it would be advisable to perform sensitivity analyses and compare the evaluations obtained from different paradigms.
The forest management test material used in this research was collected from five bookkeeping farms. The farm profitability study is part of the EUCs The Trustees of the IASC (International Accounting Standards Committee) accepted in March 2001 a proposal to change the name of IAS-standards to IFRS-standards (IASC Foundation, Annual Report 2001).
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Farm Accountancy Data Network (FADN). In Finland, there are about 900 farms involved in this network. The economic data concerning forestry of the case farms comes from this bookkeeping. However, forest inventory data provided by the farms is based on their forest management plans (FMPs). Using up-to-date FMPs, the balance sheet can be calculated accurately enough, but over time the data will become obsolete. The value of the forest and its changes requires the growing stock to be updated. In addition to an FMP, knowledge of fellings and silvicultural activities is required. In this study, the applicability of a Finnish forest management planning software (MELA) is used for updating the forest inventory data.
The financial data of 1 000 logging enterprises operating in 2007 were analyzed for the period 2001-2007. Two-thirds of enterprises were small, operating one or two machines, but they produced only one-third of the total turnover. The ratio analysis focusing on profitability, liquidity, and solvency reveals economic problems in a
quarter of the enterprises. High debts, and to some extent high levels of investments, have negative effects on profitability. The reserves needed to develop operations are very small in general and nil in the smallest enterprises. Entrepreneurs need managerial skills and appropriate business tools to cope with the problems of staying in the business, especially concerning the growth of their enterprises.
In 2002, the European Union (EU) accepted the International Accounting Standards (IAS) Jdecree, which presumes that publicly quoted enterprises provide their concern financial statements according to the International Financial Reporting Standards (IFRS)1 in 2005 at the latest. The forest industry corporations such as Stora Enso, UPM Kymmene, and the M-real group are considerable forest owners and have to apply IFRS decree and IAS regulations as well. The IAS 41 came into force at the beginning of 2003 (IAS 2002). This standard requires that the biological property of public enterprises on the stock exchange has to be evaluated by a fair value, which can be defined in terms of market prices at the time of felling and marketing expenses. However, evaluation by a fair value must not be made if the value cannot be measured reliably. The value of seedling stands, as well as young and middle-aged stands, can be based on yield value, such as net present value (NPV), which is calculated by discounting the incomes and costs. The interest rate used is defined in the IAS by the Yrisk-freeC rate. Although the IAS does not bind enterprises outside the stock exchange, there are reasons for other enterprises even on farms to adopt its practices.
The value of the whole growing stock has been divided into inventory and fixed assets in the balance sheet. The inventory value of the marketable stand is based on an allowable cut calculation that estimates the total number of felling opportunities when only forest law limitations have been included. The change in forest value also affects the profit and loss statement. The IAS therefore causes unrealistic fluctuations in net profit. The yearly fluctuations of property values are caused by fellings, as well as the change in the growing stock, but especially by the changes in stumpage prices. This profit and loss statement volatility suggests that it would be advisable to perform sensitivity analyses and compare the evaluations obtained from different paradigms.
The forest management test material used in this research was collected from five bookkeeping farms. The farm profitability study is part of the EUCs The Trustees of the IASC (International Accounting Standards Committee) accepted in March 2001 a proposal to change the name of IAS-standards to IFRS-standards (IASC Foundation, Annual Report 2001).
67
Farm Accountancy Data Network (FADN). In Finland, there are about 900 farms involved in this network. The economic data concerning forestry of the case farms comes from this bookkeeping. However, forest inventory data provided by the farms is based on their forest management plans (FMPs). Using up-to-date FMPs, the balance sheet can be calculated accurately enough, but over time the data will become obsolete. The value of the forest and its changes requires the growing stock to be updated. In addition to an FMP, knowledge of fellings and silvicultural activities is required. In this study, the applicability of a Finnish forest management planning software (MELA) is used for updating the forest inventory data.
in forestry and approximations for comparisons between tree species
The paper summarises work on this issue, preliminary ending with questionnaire-based interviews addressing IFRS-practices of Scandinavian forest industries. First, different forestry accounting traditions have been reviewed. Second, theoretical bases and consequences of the FVA have been discussed. Third, the pros and cons of IAS 41 as documented in the scientific literature have been analysed. Fourth, the development of stumpage prices has been studied and summarised in the first interview question. Fifth, forest regeneration and other costs have been discussed as well as addressed by questions two and three. Sixth, the use of this input information and the FMP are analysed and formulated as the fourth question. Seventh, the discount rate dilemma has been analysed and is reflected in terms of a question. Even market risk and bare land accounting were inquired as well. Eight, the disclosure of the growing stock has been studied and addressed. Ninth, all closing of the books of the Scandinavian forest industries using IAS 41 have been analysed, covering the periods from 2009 to 2015.
The results document the use of discount rates from 5.5% to 7.5%. It is common practice to report the FV sensitivity with respect to the discount rate, stumpage price and silvicultural cost changes. The prices used are primarily medium term averages of several years, which have even been reviewed by the management and in some cases also by external experts. The typical forecasting period is ten years, and a simple price change percentage is applied thereafter, if any. Some companies estimate discount rates using weighted average cost of capital (WACC) in which the cost of equity capital is based on the capital asset pricing model (CAPM). Also in this context, external experts have been involved in some cases. Risk free interest rate is typically derived from a Euro rate. The interest requirement of the equity capital is updated semi-annually and that of the debts quarterly. Young stands are valued at cost or ignored. According to the interviews, the application of IFRS is a quite big but not an impossible burden. However, a comparison between different entities is difficult, because the standard does not provide any exact guidelines. The findings of the closing of the books and interviews are finally summarised and discussed.
The return of forestry since 1972 and the risk of forestry investments are examined in the paper in the case of non-industrial forestry. The rate of return is given by roundwood assortment and by different areas of the country, and divided into felling, net increment, sales price and silvicultural cost components, the last of which also contains the forest improviement costs and state subsidies. The forestry return components are compared to the inflation rate.
Results are being developed for improving forest management planning service offered to non-industrial forest owners.
URL: https://books.google.fi/books?isbn=2738006566
In case, the national forest inventory (NFI) as well as stumpage price and cost statistics are covering and accurate, return on forest ownership by tree species provides a proxy for economic results and comparison. The solutions developed are extentions of the return on forest ownership results already in production for some ten years in METINFO at the Finnish Forest Research Insitute, from the beginning of 2015 in Statictical Services at Natural Resources Institute Finland. The key challenges are the splits of the growing stock e.g. between non-industrial private forests and the others, between tree species and others as well as splits of the various costs between different tree species. The exact method to split the wood production costs to three species is hard to find. As a proxy, the costs were split to tree species using timber sale earnings.
It turns out that applying logarithmic returns and deflators the average returns 1983–2015 have 2.5% for pine, 3.1 for spruce and 2.6 for birch, spruce being the best choice. Surprisingly, with time period 1993-2015 the respective figures were 4.3%, 4.7% and 3.8% and with time period 1983–1993 all negative because of the recession of the 1990s. The recent results of period 2003–2015 turn with 3.7%, 3.5% and 3.3% pine being the best choice. The respective standard deviations 10.6%, 10.1% and 10.0% hardly differ from each other. In all, spruce might be the best choice in case the sites suit for spruce. In all, the most dominating driver came, however, from price ups like in 2007 and lows in 1990s emphasising the well being of the forest industry.
calculations. Many researchers and practitioners assume a steady-state economy, but most rely on the deterministic world in their mode
lling. However, risk inclusion has recently attained a dominant position in the investment analyses. The purpose of this study has been to develop novel solutions and constructions for return on forest ownership, and to apply new approaches to the profitability of forestry and the assessment of competitiveness of non-industrial forest ownership.
First, financial and cost accounting has been developed for non-industrial private forestry (NIPF), implementing the solutions for a test enterprise. Financial accounting will also be developed for both the net profit of the enterprise and the calculated profit of the property applying extensive, balance and intensive strategies. The requirements of the International Financial Reporting Standards (IFRS) were researched and implemented in the forestry accounting of agricultural profitability book-keeping farms and the
EconomyDoctor service of the MTT Agrifood Research Finland..
Secondly, returns on stocks, debentures, offices, bonds and housing were estimated in addition to the return on forest ownership estimates, showing that NIPF ownership was not as competitive as expected, with a statistically significant correlation with private housing and the market portfolio. The return on NIPF ownership was divided into price change, felling, cost and change in growing stock components, the first of which was compared with the inflation rate.
Finally, optimal harvesting age solutions and numerical results recognising price drift, price and growth volatility, volume growth, value growth and stand establishment costs, as well as thinning benefits, were provided by proxying the stumpage price and volume growth processes by geometric Brownian motions. Moreover, comparative static and sensitivity solutions, including numerical results, showed the impact of the discount rate, price drift, and price and growth volatilities on optimal harvesting age. In all, solutions have been implemented in the METINFO Internet service and tested for the farm accountancy data network (FADN) of the EU. Moreover, developed optimal
rotation programs can be incorporated into forest management planning software products such as MOTTI and MELA, which are widely used in Finland.
ownership, return components of forest ownership, optimal timber harve