Evaluating Company's Performance Using Multiple Discriminant Analysis: A Study On Shariah Compliance Companies

• Main Authors: Nuradli Ridzwan Shah Mohd Dali, Hamdi Hakeim Mudasir, Suhaila Abdul Hamid
• Format: Research Report
• Language: English
• Published: Universiti Sains Islam Malaysia 2015
• Online Access: http://ddms.usim.edu.my/handle/123456789/7773
• Institution: Universiti Sains Islam Malaysia

The global business environment is really demanding the investors to be prepared with the emerging and dynamic markets. Measuring company's performance is important for management, shareholders, government, customers, suppliers and other stakeholders that have importance or linkage with the wealth distribution directly or indirectly. To evaluate company's performance, we need tools that can be used to measure the performance and one of most popular tools is the financial ratio analysis. This paper will explore the use of alpha Jensen technique to classify the shariah compliance companies in the Main Board of Bursa Malaysia into two categories i.e. performing and non performing. Then the result would be used with the companies 20 financial ratios to identify the model that could discriminate the performing and non performing companies using multiple discriminant analysis. The study found that only shareholders fund / share ratio is significantly contributing to the discriminant function.