Firm valuation analysis with financial valuation methods and multi-criteria decision making techniques: BIST textile index example

For a long time in the finance literature, the financial goals of companies have been expressed as value maximization rather than profit maximization. At the stage of ensuring this value maximization, determining the real values of the companies is very important for investors to make the right investment decisions. In this dissertation, it is aimed to determine the real values of companies with various financial valuation methods within the scope of different approaches and to determine the differences between valuation methods. In addition, financial performances were tried to be revealed with multi-criteria decision-making techniques. The discounted cash flow (DNA) method in the income approach, the net asset value (NETAKTIF) method in the asset-based approach, the price-earnings (P/E) ratio and the market value/book value (PD/DD) ratios within the multiplier-based valuation approach were used in this study. It has been tried to determine the corporate values between the years 2018-2022 by using the financial data of the textile business companies traded in Borsa Istanbul between the years 2012-2022. The relationship between the corporate values obtained by valuation methods and the market values of these companies in the relevant years was examined by panel data analysis. In addition, the margin of error analysis related to the valuation estimates was made and the valuation method that most converged to the market value was explained. As a result of the analyzes, when the valuation results of the companies between the years 2018-2022 were examined, it was determined that the methods that most converged to the market value were the DCF and net asset value methods. This result was also confirmed by the margin of error analysis. It was found that the methods that significantly affect the market value are DCF and Net Asset Value Methods, and as a result of the panel causality test, the methods that are in a bidirectional relationship with the market value are the DCF and P/E ratio-based valuation methods in consequence of the panel data regression analysis. As a result of the sensitivity analysis of the discounted cash flow method, it has been determined that the value driver to which the company value results are most sensitive is the WACC (weighted average cost of capital) variable. In addition, the financial performance ratios of 12 companies with stable financial data from the companies related to the Entropy method, which is one of the multi-criteria decision-making methods, were weighted, and the companies were ranked according to these ratios using the Gray Relational Analysis method. As a result of the ranking, it was determined that Söktaş Tekstil, Karsu Tekstil, and Bilici Investment companies among the 12 companies examined in the textile sector were the companies that showed the best financial performance between 2018 and 2022.