Comparison of financial performance via topsis and promethee multi-criteria decsion making methods: An application on construction sector in Istanbul Stock Exchange

Ratio analysis is one of the financial analysis methods employed for making the financial tables, prepared based on the data produced by the financial information system, more meaningful and interpretable for the users. It is possible to derive many ratios from financial tables using this method. However, the fact that there are too many criteria calculated and too many alternatives to be selected based on these criteria makes decision making difficult. Multi-criteria decision making methods bring different evaluation options to a common ground enabling users to make objective decisions. The purpose of this study is to show how to use TOPSIS and PROMETHEE multi-criteria decision making methods for ranking the alternatives to be chosen according to their financial performance and to compare the results of the two methods. Seven businesses that are traded in Istanbul Stock Market (BIST) construction index were included under the scope of this study.The liquidity, financial structure, activity and profitability ratios for the five-year period covering 2013-2017 are calculated from the annual financial statements published on the Public Disclosure Platform (KAP) official website.The calculated financial ratios were converted to a single score showing the overall company performance with the help of Microsoft Excel for TOPSIS method and Visual Promethee Academic Program for PROMETHEE method and the performance levels of enterprises were ranked according to these scores. Correlationbetween the ranking results obtained by using these methods were examined and statistically tested. It was observed that the ranking results obtained by both methods were highly similar to each other.