The difference of main operation ratios performance between energy industry and Electronics and appliances industry: a discriminant analysis from 19 listed companies

Zhixiang Wang

doi:10.54691/bcpbm.v29i.2287

Authors

Zhixiang Wang

DOI:

https://doi.org/10.54691/bcpbm.v29i.2287

Keywords:

Discriminant analysis, Business analysis, Technology industry, Energy industry

Abstract

Companies in different industries have their own operation situation. Then, if companies in a same industry are facing some general same problems or advantages, will some financial performance of companies in an industry be distinguishable from companies in a different industry? Through using discriminant analysis, the paper gives out the outcome of differentiating two industries based on the combination of two ratios. Each industry is represented by a number of companies that is listed and successful. Five rations have been adopted and combined, including Current Ratio, Operating Expense Ratio, Gross Profit Margin and EBIT Margin. The paper finds that the combination of Gross Profit Margin and Operating Expense Ratio have the highest Mahalanobis distance, which means the best way to distinguish two industries However, the number is too small to effective, so people are hard to decide the industry of a company only based on its business performance.

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