Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/286185 
Title (translated): 
Análisis en componentes principales de los estados financieros: Un enfoque composicional
Year of Publication: 
2020
Citation: 
[Journal:] Revista de Métodos Cuantitativos para la Economía y la Empresa [ISSN:] 1886-516X [Volume:] 29 [Year:] 2020 [Pages:] 18-37
Publisher: 
Universidad Pablo de Olavide, Sevilla
Abstract: 
Financial ratios are often used in principal component analysis and related techniques for the purposes of data reduction and visualization. Besides the dependence of results on ratio choice, ratios themselves pose a number of problems when subjected to a principal component analysis, such as skewed distributions. In this work, we put forward an alternative method drawn from compositional data analysis (CoDa), a standard statistical toolbox for use when data convey information about relative magnitudes, as financial ratios do. The method, referred to as the CoDa biplot, doe s not rely on any particular choice of financial ratio but allows researchers to visually order firms along the pairwise financial ratios for any two accounts. Non -financial magnitudes and time evolution can be added to the visualization as desired. We show an example ofits application to the top chains in the Spanish grocery retail sector and show how the technique can be used to depict strategic management differences in financial structure or performance, and their evolution over time.
Subjects: 
financial ratio
compositional data analysis (CoDa)
biplot
grocery retail sector
data visualization
JEL: 
C38
G30
M10
M49
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-sa Logo
Document Type: 
Article

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