Composite Financial Index Research Articles

The Financial Sustainability of Retail Food SMEs Based on Financial Equilibrium and Financial Performance

The aim of this study was to investigate the financial sustainability of retail food SMEs for the 2016–2021 period, in Romania, from the perspective of financial equilibrium and performance. A multivariate analysis was used, including a correlation analysis, a principal component analysis (PCA), and a cluster analysis. The empirical results show a positive link between the financial performance and financial equilibrium indicators. We employed the PCA in order to build a composite financial index using financial equilibrium indicators (ratios of liquidity, solvency, collection, and payment period) and financial performance indicators (Return on Assets and Return on Equity). The results show that financial equilibrium and performance are the two main dimensions which the financial sustainability index (FSI) was constructed on. Taking into account the dimensions of financial sustainability, the analyzed SMEs were clustered in four homogeneous clusters. The research findings clearly demonstrated that the retail food SMEs with a good/acceptable financial sustainability also have a good/acceptable financial balance and performance situation. Furthermore, a significant part of the analyzed SMEs faces difficulties regarding financial sustainability, being characterized by the lowest values of FSI, determined by both an uncertain situation in terms of liquidity, leading to a financial disequilibrium, and a negative financial performance. Therefore, this research emphasizes some specific measures that need to be taken to boost financial sustainability of these businesses in the retail food sector.

Hemşirelerde Ahlaki Cesaret Ölçeği: Uyarlama, Geçerlilik ve Güvenilirlik Çalışması

Aim: This study’s aim was to evaluate the psychometric properties of the Turkish version of the Nurses’ Moral Courage Scale.
 Materials and Methods: This was a methodological study. The study sample consisted of 250 nurses. Data were collected by using a socio-demographic characteristics form and the Nurses’ Moral Courage Scale (NMCS). Turkish translation and content validity studies were conducted for scale validity, confirmatory factor analysis (CFA) was used to ensure construct validity and invalidity analysis, and Cronbach's α coefficient was used to evaluate internal consistency in reliability analysis.
 Results: The mean age of the participants was 29.02±4.76 years and 67.6% were women. The Kaiser-Meyer-Olkin was 0.934, for which the Bartlett’s test of sphericity was significant (chi-square=3639.923. p=0.001). These values were evaluated as the sample size was sufficient and the data set was suitable for factor analysis. Some indices were used to examine the fit of the model of the Moral Courage Scale of Nurses. The chi-square/degrees of freedom, Groningen Frailty Indicator, Adjusted Composite Financial Index, Composite Financial Index, root mean square error of approximation, and standardized root mean square residual were 4.10, 0.98, 0.98, 1.00, 0.11, and 0.06, respectively. The results of the confirmatory factor analysis showed a good model fit. The total scale had a Cronbach’s alpha of 0.952.
 Conclusion: The results of this study indicate that the Turkish version of the Nurses’Moral Courage Scale is a valid and reliable scale. However, further studies are needed to refine its psychometric properties.

The Impact of Financial Inclusion on Income Inequality: Case Study in Europe

Financial inclusion is considered an important factor which contributes to reducing poverty and income inequality. A lot of previous researches showed the impact of some dimensions of financial inclusion on income inequality. However, financial inclusion is measured by many different dimensions; therefore, to assess the combined impact of financial inclusion on income inequality, the authors first used the principal components analysis to build a composite financial index, with the datasets from 29 high- and upper-middle-income countries in Europe in the period of 2011-2017. Next, the authors used the two-stage least squares (2SLS) regression method to estimate the impact of financial inclusion on income inequality. The research results found that the financial inclusion, the percentage of the population aged 25 and over graduating from secondary education, the economic openness had an opposite effect on income inequality. On the contrary, the employment-to-population ratio had a directional effect on income inequality. Based on the obtained estimates, the study proposed some solutions to reduce income inequality.

Predicting Sustainable Bank Performance in Nigeria Using Composite Financial Index

This study seeks to predict sustainable Bank performance in Nigeria using Composite Financial Index. Composite Financial Index (CFI) is a single indicator of overall institutional financial health based on performance in four principal domains of finance; sufficiency and flexibility of financial resources, management of debt, the performance of assets, and results from operations. Each domain is measured by a core financial ratio. The main objective of the study was to find out the level of banks’ performance in Nigeria using Composite Financial Index. The study adopted Market Power Theory and the Efficiency Structure Hypothesis. The paper specified various ways to achieve its objectives, such that objective one was achieved by compiling all the variables that make up the CFI, and all these variables would be identified and compared with the contents of financial reports of the banks. The paper in its finding shows some weaknesses in the application of individual financial ratios in measuring performance and predicted that Composite Financial Index would better explain the true performance level of a bank rather than an individual financial ratio. The paper recommends that Nigeria banks should adopt the use of CFI in measuring performance and Analysts who desire to use the conventional ratio analysis should also apply the CFI as a further confirmation of the results of the conventional ratio analysis so that the public and Nigeria banks would not experience what happened in the sector in 2009.

COMPOSITE FINANCIAL PERFORMANCE INDEX PREDICTION – A NEURAL NETWORKS APPROACH

Financial indicators are the most used variables in measuring the business performance of companies, signaling about the financial position, comprehensive income, and other significant reporting aspects. In a competitive environment, the performance measurement model allows performing comparative analysis in the same industry and between industries. This paper aims to design a composite financial index to determine the financial performance of listed companies, further used in predicting business performance through neural networks. Principal components analysis was used to build a composite financial index, employing four traditional accounting indicators and four value-based indicators for the period 2011–2018. Five experiments were conducted to predict business performance through the composite financial index. The results showed that observations from two years, of the first three experiments, indicate a better predictive behavior than the same experiments using observations from one year. Therefore, we concluded that observations from more than one year are necessary to predict the value of the financial performance index. Findings led us to the conclusion that recurrent neural networks model predicted better financial performance composite index when taken into consideration more real data for the financial performance index (2012–2018) instead of just for one year (2018).

Analyzing Financial Health of the SMES Listed in the AERO Market of Bucharest Stock Exchange Using Principal Component Analysis

In this paper we aimed to build a composite financial index for measuring the financial health of the companies listed in the AERO (Alternative exchange in Romania) market of the Bucharest Stock Exchange. We used a principal component analysis in order to build this composite financial index using the rates of return, liquidity and the management of 25 companies listed in the AERO market for the period 2011–2018. We conceived this composite indicator as a score function that established according to the numerical values that result from its application when a company was financially healthy, when it had a poor financial health and when it was financially stable. In order to test the financial health of the selected SMEs (small and medium enterprises), we used the one sample t-test under the model of the study and the three classifications of Z (Z < 0—companies with poor financial health, 0 ≤ Z ≤ 0.5—companies with good financial health and Z > 0.5—companies with very good financial health). In this study we also aimed to identify the possible correlations between the solvency rate and the financial health index and between solvency rate and the evolution of some economic and financial measures of the companies’ activities. The results of the regression analysis using panel data showed a positive and statistically significant relation between solvency and the three rates (rates of return, of liquidity and of management, respectively) determined using the analysis of the principal components. The former model of the solvency rate identified correctly 94.9% of the SMEs with poor financial health, 40% of the SMEs with stable financial health and 72.2% of the SMEs with good financial health.

Financial sector development and smart cities: The Indian case

The financing aspect in the development of a smart city is often discussed in the smart city literature and policy circles, however, the discussion on how people residing within the smart city could access finance is often missing in this discourse. This study aims to fill in this gap in the current literature on smart cities and examines existing financial sector development of selected smart cities in the Indian context. The study develops a composite financial index (for 18 smart cities) covering the dimensions of access and usage of financial services. Results revealed high inter-state and intra-state inequality as the cities with high FSI values and those with low FSI values are both located in the developed western and southern states. A similar mixed picture emerges even for the less developed low income states such as Madhya Pradesh.

Enrollment Pathways to Financial Sustainability: Choosing the Road Less Traveled

Rising costs, burgeoning debt, and falling credit ratings are among the financial challenges faced by small, tuition-dependent private colleges, including many members of the Council for Christian Colleges & Universities (CCCU). In their efforts to generate more revenue, most of these institutions have focused on enrollment strategies as the primary pathway to sustainability. This study explored the question: Do enrollment-focused efforts improve the financial condition of these institutions? Using a multilevel model, the influences of admitted student yield rate, undergraduate enrollment growth, enrollment in graduate and nontraditional programs, unfunded tuition discount rate, and institutional aid from donor sources were correlated with Composite Financial Index (CFI) scores during a four-year period. The results supported the need for a balanced financial strategy with priority given to increasing donor resources. Positive trends in undergraduate enrollment contributed to increasing financial health in some time periods. However, as unfunded discount rates or admitted student yield rates increased, constraints were placed on financial performance. No significant correlation was found between graduate and nontraditional programs and financial health.

PERFORMANCE MEASUREMENT OF STATE UNIVERSITY WITH SERVICE PUBLIC FINANCIAL MANAGEMENT BOARD IN INDONESIA

This study aims to determine the pattern of university performance management Public Service Board (BLU). To measure the size of the financial performance of the university using the ratio Composite Financial Index (CFI) Higher Education made ​​by KPMG in the financial statements of public universities in Indonesia. This ratio includes the primary reserve ratio, net income ratio, return on net assets ratio, and the viability ratio. To determine the performance of three ways, namely by comparing the performance of units before and after use patterns BLU financial management, comparing the performance of units BLU and units non-BLU, examine the effect of flexibility on performance. The analytical tool used in this research is to use your paired sample t-test, independent sample t-test, and linear regression. The results showed that there were different university performance before and after using the BLU management scheme, there are different patterns of performance management BLU and universities with the pattern of non-BLU, and flexibility affect the performance. This difference is seen in the primary reserve ratio and the net income ratio. Return on net assets ratio showed no significant results, whereas the viability ratio can not be measured because only two universities that reported this ratio. The university is the University of Indonesia and Hasanuddin University.

<i>Academic Turnarounds: Restoring Vitality to Challenged American Colleges and Universities</i> (review)

Reviewed by: Academic Turnarounds: Restoring Vitality to Challenged American Colleges and Universities Michael K. McLendon Academic Turnarounds: Restoring Vitality to Challenged American Colleges and Universities, edited by Terrance MacTaggart. Westport, CT: Praeger, 2007. 144 pp. $44.95 (cloth). ISBN: 978-0-275-98806-7. Terrance MacTaggart, former chancellor of the University of Maine and the Minnesota State University systems, is author of several widely-cited, edited volumes on state governance of public higher education (MacTaggart, 1996, 1998). In Academic Turnarounds, MacTaggart turns his attention more squarely to the campus level in an effort to address how institutions facing decline or mediocrity can reposition themselves for success. He has assembled an experienced group of former college and university executives whose impressive track record in leading efforts at institutional revitalization lends authenticity to the volume. Academic Turnarounds is organized into three sections. In the first section, MacTaggart and colleagues outline and explore a three-stage schema for understanding academic turnarounds. Chapter one, authored by MacTaggart, serves as the conceptual centerpiece of the volume. MacTaggart describes each of the three turnaround stages: restoring financial stability, enhancing marketing and (re)branding, and strengthening academic programs and culture. The first stage, MacTaggart claims, is always an essential step for the turnaround of institutions [End Page 601] in financial distress, yet many nonselective private institutions remain "frozen" in this phase of development, unable to advance to subsequent stages. The branding or rebranding of the institution, the second stage in academic turnarounds, is a longer-term effort aimed at creating a story that defines the institution in the minds of students. Institutions accomplish this stage less frequently, we are told, yet for ones that are successful, powerful synergies can emerge: stronger academic quality reinforces the institution's image, enabling it to charge higher tuition and thus further strengthen its financial footing. Mac Taggart concludes the chapter by delineating the roles of presidents, trustees, and faculty across each of the three stages. Chapters two through four examine in greater depth each of the core stages. MacTaggart, in chapter two, highlights a number of "critical success factors" that seem always to be present in successful turnarounds: new leaders, accurate and timely financial information, an immediate focus on finances, transparency, and faculty involvement. MacTaggart briefly then describes how these forces played out in turnaround efforts at Syracuse University, Regis College, and Green Mountain College. In chapter three, Jerry Berberet illustrates the importance of marketing and branding in the stories of several institutions that have "repositioned" themselves in recent years. In the final chapter of this section, Adrian Tinsley reflects on "Stage III transformations," ones in which true academic revitalization has occurred. What are the essential elements of an academic revitalization? Having the right leader, using the right aspirational model for institutional excellence, measuring oneself against the right external ratings/rankings systems, getting better students, and designing better academic programs all are key, according to Tinsley. She concludes by examining how these elements helped drive efforts at revitalization at the University of Denver, the College of New Jersey, and Northeastern University. Section two of the book examines a range of "special topics" critical to the successful turnaround of institutions. Michael Townsley describes a series of diagnostic tools that leaders of private colleges may deploy in analyzing financial performance at these institutions. He touches on the use of trend tables, marginal and ratio analysis, liquidity ratios, asset management ratios, operational performance ratios, and the composite financial index. In his chapter, MacTaggart turns to some of the distinguishing features of public-sector turnarounds that distinguish them from ones in the private sector. The key distinction, he maintains, is that those leading turnarounds of public colleges and universities must grapple with an overtly political environment that can hold important implications for revenue generation, agenda-setting, and governance of those institutions. MacTaggart considers how, beginning in the mid-1990s, these factors helped shape the University of Connecticut's successful turnaround. The final section of Academic Turnarounds counsels leaders on initiating their own institutional transformation efforts. Kenneth Shaw, former president of Syracuse University, reflects on the activities that new presidents should undertake both before and immediately subsequent to their accepting a new job. In the book...