APPLYING MPCA ANALYSIS TO EVALUATE FINANCIAL PERFORMANCE OF ROMANIAN LISTED COMPANIES

Abstract

The paper aims to investigate the main determinants of financial performance of Romanian companies using principal component analysis technique (PCA) for the year 2015 by constructing a composite index of financial performance and revealing also the main groups of companies according to their performance using cluster analysis technique. For this, the methodology of building composite indices proposed by the OECD (2008) will be applied. Furthermore, the sample used in the analysis covers a number of 57 companies from 8 economic sectors at the level of 2015. The analysis used 11 financial accounting indicators: market value added (MVA), added liquid value / credit valuation adjustment (CVA), weighted average cost of capital (WACC), earnings per share (EPS), price earnings ratio (PER), dividend per share (DPS), return on assets (ROA), return on equity (ROE), share of intangible assets (intangible investments) in total turnover (ITO), global solvency (SOL) and current liquidity (CL). Data was collected from the annual financial statements published on the websites of the sampled companies or through the BSE website. The empirical results of MPCA analysis revealed that the financial indicators such as return on assets, share of intangible assets (intangible investments) in total turnover, added market value and global solvency as well as current liquidity are the main determinants of financial performance of Romanian companies. Analyzing the main groups of companies according with their financial performance for the year 2015, the cluster analysis pointed out the existence of two main poles of financial performance: S.N.T.G.N. TRANSGAZ and PETROLEXPORTIMPORT, leaders in their sectors.

Keywords

• financial performance, business reporting, Romanian listed companies, indicators, cluster analysis