2017 Volume 24 Issue 2 Pages 17-23
The uses of ROE, ROA and other financial ratio indicators as business analysis to analyze company’s operating conditions are commonly used. However, each company’s business model, business strategy, development history are not the same, hence the financial structure is different as well. This study adopts principle component analysis as method to explore such features. Six major financial items data are chosen instead of using financial ratio indicator and securities report. Principal component analysis was applied to the study of financial data of two large corporations and three small and medium-sized firms in cosmetic industry in Japan. Principal component matrix was used to interpret the performance characteristics of each company and scatter diagram of principal component scores was used to visualize each company’s performance. This analysis is simpler and more convenient than the ROE and ROA ratio that requires expertise. In addition, we were able to analyze not only the financial figures but also the number of employees who are non-financial figures.
