Measuring financial performance through principal component analysis: A study of selected iron and steel companies in India

AshEse Journal of Business Management                                                                 

Vol. 6(1), pp. 190-199, June, 2021

ISSN: 2059-7835  

© 2021 AshEse Visionary Limited 

http://ashese.co.uk/business-management1/blog

Full Length Research

 

Measuring financial performance through principal component analysis: A study of selected iron and steel companies in India

Krishna Singh1 and Debasish Sur2*

1Department of Economics, University of Gour Banga, Po- Mokdumpur, Malda- 732103, West Bengal, India.

2Department of Commerce, The University of Burdwan, Golapbag, Burdwan-713104, West Bengal, India.

*Corresponding author. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Received May, 2021; Accepted June 2021

 

The present study attempts to analyse the financial performance of the fifteen selected Iron and Steel companies in India during the post-reform era. The financial performance index was designed by considering profitability index, liquidity index and asset management efficiency index. Principal component method was applied in constructing three sub-indices and finally financial performance Index. An attempt was also made to identify the nature of the trend in financial performance index of the selected companies during the study period. Based on the average financial performance index, Rashtriya Ispat captured the top most position while Jindal Steel was able to find place in the first rank in respect of consistency coefficient. The study revealed that out of the fifteen companies, only two companies followed significant positive trend while six companies adopted notable negative trend. Special attention should be given to the liquidity and profitability aspects of the companies to enhance their overall financial performance.

 

Keywords:Financial Performance Index, Iron and Steel Companies, Profitability, Liquidity

JEL Code:M21, M41

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