文章基本信息

标题：Application of Principal Component Analysis to Facilitate Financial Statement Analysis: An Automobile Industry Case
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作者：Neha Puri ; Harjit Singh ; Amlan Chakrabarti 等
期刊名称：Academy of Accounting and Financial Studies Journal
印刷版ISSN：1096-3685
出版年度：2022
卷号：26
期号：2
页码：1-17
语种：English
出版社：The DreamCatchers Group, LLC
摘要：Purpose: After becoming the fourth largest auto maker in 2019 with nine percent annual growth rate and adding twenty-six million vehicles annually to its fleet, of which five million are shipped overseas. Around 2025, India is expected to be the third largest car market in terms of volume. The momentum will be maintained by rising middle-class income and a young population. Electric cars are also becoming more popular as a means of reducing pollution. Considering industry preparedness, Indian Government intend to develop India as a center of global manufacturing. Experts opine that India could be an aggressive leader in share mobility by 2029. The present study assesses the role played by key auto makers vis-à-vis financial performance of the Indian Automobile Industry. Consequently, a novel construction of principal components by periodicity of key financial ratios has been analyzed, in order to reduce the computational cost for their calculation, although increasing the accuracy. In 2018, India became the world's fourth largest car market, with sales up 8.3% year on year to 3.99 million vehicles. In 2018, it was the seventh-largest commercial vehicle manufacturer. An assessment of the three giants' financial success in this field is also essential. Fully understanding how many ratios can better be used with no loss of details, however, is complicated. The paper is about discussing this problem. Design/methodology/approach: Based on the financial statements of 14 companies, including TVS Motors, Mahindra & Mahindra Ltd., Maruti Suzuki India Ltd., Hindustan Motors, Ashok Leyland Ltd., Bajaj Auto Ltd., Tata Motors Ltd., and Eicher, a total of five financial ratios were calculated, including face value, sales turnover, fixed assets, total non-current assets, total current assets, and total assets value. Findings: At the end of the paper, the authors discuss how financial performance can be assessed using just five ratios rather than an expensive study of a large number of ratios that can be difficult to comprehend. The writers may utilise a few to represent the others with little loss of information because the ratios are all connected because they derive from the same statements. Originality/value: This study will benefit many stakeholders that are interested in each company's financial success by providing a faster approach to assess performance. It will also aid people who handle financial reporting in selecting the ratios that are important in representing their company's success. The application of PCA results in unbiased ratios that are particularly useful in evaluating performance.
关键词：Performance Analysis;Financial Ratios;Principal Component Analysis;Financial Statements;Automobile Industry