Financial evaluation of listed companies based on entropy method and principal component analysis
Hongze Li, Yuan Li · 2010
Financial evaluation, which can guide investors' investment behaviors is a part of financial data mining. This paper used public financial data of 51 listed companies in power industry, 2008, as samples. We used improved entropy method to get the score of four groups (profit-gaining capacity, paying capacity, property management capacity and growth capacity) of financial indicators, and then, we applied principle component analysis (PCA) to reduce four-dimensional data into two-dimensional result. This kind of method combination is original, and has its own advantages which can resolve conflicts between the cumulative squared loadings and dimensions. The end result of this paper is concise, and the analytic process is rigorous and scientific.