The Comprehensive Evaluation on Financial Performance of the Ceramic Company Based on Principal Component Analysis

Abstract:

The ceramic company financial performance indicator has multilayers, many dimensions and intersect characters, and the comprehensive evaluation on it is a big challenge. Firstly, this paper introduces principal component analysis theory and tool. Secondly, it constructs the four-dimensional evaluating indicator system based on “debt-paying ability, operation capability, profitability, and development capability”. In the end, based on the financial report data, this paper conducts an empirical principal component analysis on 20 typical ceramic enterprises’ financial performance. The conclusion is that the ceramic business finance performance is mainly decided by four greatest factors including “debt-paying ability, profitability, efficiency, development” and the impact of the four greatest factors upon the finance performance degree is different. This research’s innovation lies in using the principal components method to give the weight to the evaluating indicators objectively, providing not only the new tool for the ceramic enterprise financial performance assessment method’s evolution, but also the new mentality for the ceramic enterprise financial performance’s improvement.

• Periodical: Key Engineering Materials (Volumes 512-515)
• Pages: 1098-1102
• DOI: https://doi.org/10.4028/www.scientific.net/KEM.512-515.1098
• Online since: June 2012
• Authors: Bao Cheng He, Hong Tao Jiang
• Keywords: Ceramic Company, Factor, Financial Performance, Principal Component Analysis (PCA)

References

[1] R. A. Johnson, D. W. Wichern, Applied Multivariate Statistical Analysis, 6th ed., Pearson Education, Inc. 2007, pp.430-479.

[2] H. Hotelling, Analysis of a Complex of Statistical Variables into Principal Components, Journal of Educational Psychology 24(1933) 417-441.

DOI: 10.1037/h0071325

[3] T.W. Anderson, An Introduction to Multivariate Statistical Analysis, third ed., New York: John Wiley, 2003.

[4] R. A. Brealey and S. C. Myers, Principles of Corporate Finance, 5th ed., McGraw-Hill Companies, Inc, 1996.

[5] Z.H. Li, SPSS for Windows Statistical analysis tutoria, Electronics Industry Press in China, 2005.