Abstract
Investments are accompanied by risks. How investors choose the right investment tools to assist in the selection of investment targets is a topic worth exploring. Therefore, this study aimed to develop an investment decision-making process to deal with this issue. Firstly, we proposed a globalized modified grey relational analysis to select the representative indicators including the financial indicators and risk measurement indicators. Then we combined financial and risk evaluation indicators, and divided companies into low, moderate and high-risk groups through the grey clustering analysis. Finally, Vlse Kriterijumska Optimizacija Kompromisno Resenje (VIKOR) combined with the grey entropy weighting method was applied to business performance evaluation and sorting of each grouping. In order to verify this study, a combination of 21 financial ratios and four risk indicators was utilized in order to verify the evaluation and decision-making process in the operating performance of 62 listed opto-electronics companies in Taiwan. The results of ranking the operating performance for each group can be made available to company managers as a reference in order to enhance competitiveness and business performance. The results can also be used as the basis for decision-making to aid investors who are facing many investment portfolios.
Highlights
Good or poor business performance depends on whether a company’s resources are used effectively and the quality of management ability, and the company’s ability to show the potential for growth and development in the future
A literature review of operating performance evaluation shows most past studies have mostly concentrated on the financial performance of companies (Wang 2009)
In view of the above facts, this study focuses on the use of grey relational analysis (GRA) to select the representative financial indicators for listed companies in the high-tech industry
Summary
Good or poor business performance depends on whether a company’s resources are used effectively and the quality of management ability, and the company’s ability to show the potential for growth and development in the future. This allows investors to fully understand the company’s business situation, financial performance and risks, which could be used as important references when making investment decisions. Using financial ratios to measure the financial position and operating performance of an enterprise has always been a very effective evaluation method
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