Research of Composite Indicator of Business Performance

• Main Authors: Lee, Mei-Lin, 李美琳
• Other Authors: Lin Chan-Jane
• Format: Others
• Language: zh-TW
• Published: 1997
• Online Access: http://ndltd.ncl.edu.tw/handle/44082080117367413150

碩士 === 國立臺灣大學 === 會計學系 === 85 === Most business rankings published by domestic journals and institutes are based on single indicator such as net sales or total equity. Only very few rankings were generated based on composite indicator of managementperformance.Accordingly, this paper attempts to construct a model that usesmultivariate analysis to choose the composite indicator and considers bothfinancial and non-financial variables to provide a more thorough picture about the business performance. Based on prior studies, this paper first applied factor analysis on the 49variables of 270 listed companies in 1994. This approach identified seven common factors: profitability, size, liquidity, activity, ability of dividendspayout, cash flows, and productivity. Second, the variable with the largest factor loading on each common factorwas selected as representative variable. These seven variables are return on assets, total equity, current ratio, total asset turnover, total number of dividends payout years in last five years, cash flows from operating/total liabilities, and net sales per employee. Third, this paper tried to weigh these seven variables by using sensitivity analysis. The final weights of variables were decided by selectingthe weighting mix with the least difference of ranking compared with other mixes. The selected weighting mix of these seven variables is as follows: return on assets, 31%; total equity, current ratio, total asset turnover, 15% each; total number of dividends payout years in last five years, cash flows from operating/total liabilities, net sales per employee, 8% each. Based on the variables and their weights described above, composite indicator of business performance was generated. This study ranked 310 listed companies using 1995 financial and non-financial data. The final ranking showsthat the top 10 are either electronic companies or plastics companies.