A Study On The Application Of Factor Analysis And The Distributional Properties Of Financial Ratios Of Malaysian Companies

Asst. Prof. Dr. K-Rine Chong, Assoc. Prof. Dr. Ben Yap, Prof. Dr. Zulkifflee Mohamad

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Type :	Academic Journal
Main Author :	Asst. Prof. Dr. K-Rine Chong, Assoc. Prof. Dr. Ben Yap, Prof. Dr. Zulkifflee Mohamad
Title :	A Study On The Application Of Factor Analysis And The Distributional Properties Of Financial Ratios Of Malaysian Companies
Varying Form of Title :	International Journal of Academic Research in Management (IJARM) ,Vol. 2, No. 4,(2013), Pages 83-95
Content Type :	still image (rdacontent)
Media Type :	computer (rdamedia)
Carrier Type :	online resource (rdacarrier)

Publisher :	International Journal of Academic Research in Management
Year of Publication :	2013
Summary :	This paper investigates the use of factor analysis on financial ratios as well as examines their distributional properties. With an initial set of 28 financial ratios, seven ratios with the highest factor loadings were selected, and subsequently were assessed for normality. All seven ratios were found to be positively skewed. After removal of outliers and transformation of values, only one ratio achieves normality, while another ratio approaches normality. This study shows that it is not necessary to use many ratios for assessing financial performances. It also shows that financial ratios generally do not display a normal distributional pattern and normality can be improved for certain ratios only after remedial actions are taken.
Corporate Name :	UNIRAZAK Library
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