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.