CATEGORIZING ENTERPRISES THROUGH ADVANCED OPERATING PROFIT MARGIN METRICS
CATEGORIZING ENTERPRISES THROUGH ADVANCED OPERATING PROFIT MARGIN METRICS
Author(s): Sonja Đuričin, Isidora Beraha, Marko JeločnikSubject(s): Economy, Business Economy / Management, Financial Markets
Published by: Visoka škola za poslovnu ekonomiju i preduzetništvo
Keywords: Operating Profit Margin (OPM); Financial Performance; Linear Discriminant Analysis (LDA); Ratio Analysis; Bankruptcy Prediction
Summary/Abstract: The research objective is to test the potential for overcoming limitations in the interpretation of ratios,with a focus on Operating Profit Margin (OPM). The research examines the OPM values of 43 enterprisesover five consecutive accounting periods. It uses Linear Discriminant Analysis (LDA) to determine therange of OPM values and assess financial performance more dynamically. The methodology focuses oncalculating the OPM for each enterprise, followed by a categorization into successful, neutral or bankruptbased on the financial results derived from the financial reports. This research not only challengestraditional financial ratio analysis, but also contributes to strategic financial management by allowing amore detailed categorization of enterprises based on their operational profitability, thus providing a robusttool for financial decision making and predictive analysis
Journal: International Review
- Issue Year: 2024
- Issue No: 1-2
- Page Range: 53-60
- Page Count: 8
- Language: English
