Development of A Financial Performance Benchmarking Model for Corporate Firms

Abstract

In this study, we developed a financial performance evaluation model to rank the corporate firms of 24 sectors in the Turkish economy. The developed model is based on the financial ratiosand Technique for Order Preference by Similiarity to Ideal Solution (TOPSIS) approach. This model of ferscorporate firm's rating scores with respect to its competitors belonging to the same industry. The developed model is coded in Visual Basic and tested with real case studies. Financial performance evaluation rankings obtained from TOPSIS, Vise Kriterijumska Optimizacija I Kompromisno Resenje (VIKOR), Grey Relational Grade (GRA), and Multi-Objective Optimization on thebasis of Ratio Analysis (MOORA) methods were compared by using Spearman's rank correlation test. Based on the test results, it was found that the TOPSIS method is the most appropriate method for the evaluation of financial performance. An application is also provided in the paper for illustrative purposes.