Abstract
The objective of this article is to rank firms by their financial performance using statistical I-distance method, which has the ability to determine both ranking and important factors. For this purpose, the method was first applied to 110 Turkish industrial firms without any sectorial separation and then to 7 different sectors, and various findings about firms, sectors and variables were obtained. The I-distance method is used to get rid of the high correlation between variables during the analysis. The reason for choosing the I-distance method is that it allows you to sort the variables by importance and eliminate insignificant variables, as well as take into account correlations between variables. The authors believe that the method is superior to other alternative methods thanks to these qualities. Through a number of analyses, it was possible to see positions of firms both within the whole sample and their own sectors. Furthermore, this method provided valuable information on which factors were important in assessing firms’ financial performance. It has been observed in the analyses that the most effective factors in ranking firms and separating them from each other were profitability ratios, and the fact that liquidity and financial leverage ratios are not effective at all. When examined from a sectoral perspective, the nonmetal mining sector and the chemical, petroleum and plastic sectors seem to be better than other sectors in the performance rankings.
Highlights
One of the most important objectives of enterprises is to meet the expectations of their shareholders at the maximum level by increasing their market value
The reason for choosing the I-distance method is that it allows you to sort the variables by importance and eliminate insignificant variables, as well as take into account correlations between variables
Mandic our aim is to rank firms according to their finan- et al (2014) attempted to rank the financial percial performance, in this chapter, we focus espe- formance of banks using the TOPSIS method cially on studies with ranking purposes
Summary
One of the most important objectives of enterprises is to meet the expectations of their shareholders at the maximum level by increasing their market value It is of vital importance for firms to achieve this objective in today’s increasingly competitive environment. Firms operating in the same sector need to make the right decisions so as to increase their competitiveness in the national and international area. While these decisions are made based on the experience of the management, the past financial information of the enterprise is of great significance. The analysis results provide detailed information about the performance of the firm in terms of managers, shareholders, credit institutions, customers and investors
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