Classification of financial ratios for BIST manufacturing sector companies by principal axis factor analysis

It can be said that financial analysis is an unavoidable requirement for companies. A company's board of directors, investors, creditors, and anyone else interested in the company can use financial analysis to reveal the true financial position of the company. There are various methods of performing financial analysis, the most common of which is financial ratio analysis. In this analysis, there are many ratios and linear relationships can be established between them. However, multiplicity does not necessarily imply accurate and reliable results. On the contrary, it is more advantageous to derive a small number of new variables that explain a large proportion of the variance of the ensemble. This study aims to classify financial ratios for BIST manufacturing companies through principal axis factor analysis and express them as new independent variables. To achieve this objective, information on financial analysis is mentioned and information on factor analysis is given. In addition, data from 186 manufacturing companies were collected and analyzed using principal axis factor analysis in SPSS. As a result, five factors were extracted using the principal axis factor analysis method, and 22 financial ratios were distributed across these five factors. These factors explain 67.24% of the total variance of the sample. The factor saturation results were read after orthogonal rotation using the Varimax method. The number of saturated financial ratios per sample size was found to be 16. In addition, although it is recommended that interested parties use the 16 ratios obtained in this study when analyzing the financial position of any manufacturing company traded on the BIST, a comparative study between different sectors and the search for appropriate ratios that explain as much as possible the variance in these sectors will also enrich the study.