PMID- 36010720 OWN - NLM STAT- PubMed-not-MEDLINE LR - 20220830 IS - 1099-4300 (Electronic) IS - 1099-4300 (Linking) VI - 24 IP - 8 DP - 2022 Jul 31 TI - Financial Network Analysis on the Performance of Companies Using Integrated Entropy-DEMATEL-TOPSIS Model. LID - 10.3390/e24081056 [doi] LID - 1056 AB - In this paper, we propose a multi-criteria decision making (MCDM) model by integrating the entropy-DEMATEL with TOPSIS model to analyze the causal relationship of financial ratios towards the financial performance of the companies. The proposed model is illustrated using the financial data of the companies of Dow Jones Industrial Average (DJIA). The financial network analysis using entropy-DEMATEL shows that the financial ratios such as debt to equity ratio (DER) and return on equity (ROE) are classified into the cause criteria group, whereas current ratio (CR), earnings per share (EPS), return on asset (ROA) and debt to assets ratio (DAR) are categorized into the effect criteria group. The top three most influential financial ratios are ROE, CR and DER. The significance of this paper is to determine the causal relationship of financial network towards the financial performance of the companies with the proposed entropy-DEMATEL-TOPSIS model. The ranking identification of the companies in this study is beneficial to the investors to select the companies with good performance in portfolio investment. The proposed model has been applied and validated in the portfolio investment using a mean-variance model based on the selection of companies with good performance. The results show that the proposed model is able to generate higher mean return than the benchmark DJIA index at minimum risk. However, short sale is not allowed for the applicability of the proposed model in portfolio investment. FAU - Liew, Kah Fai AU - Liew KF AUID- ORCID: 0000-0001-9787-3665 AD - Department of Physical and Mathematical Science, Faculty of Science, Universiti Tunku Abdul Rahman, Kampar Campus, Jalan Universiti, Bandar Barat, Kampar 31900, Perak, Malaysia. FAU - Lam, Weng Siew AU - Lam WS AUID- ORCID: 0000-0002-9850-4850 AD - Department of Physical and Mathematical Science, Faculty of Science, Universiti Tunku Abdul Rahman, Kampar Campus, Jalan Universiti, Bandar Barat, Kampar 31900, Perak, Malaysia. FAU - Lam, Weng Hoe AU - Lam WH AUID- ORCID: 0000-0002-7766-9170 AD - Department of Physical and Mathematical Science, Faculty of Science, Universiti Tunku Abdul Rahman, Kampar Campus, Jalan Universiti, Bandar Barat, Kampar 31900, Perak, Malaysia. LA - eng PT - Journal Article DEP - 20220731 PL - Switzerland TA - Entropy (Basel) JT - Entropy (Basel, Switzerland) JID - 101243874 PMC - PMC9407221 OTO - NOTNLM OT - DEMATEL OT - TOPSIS OT - causal relationship OT - entropy OT - financial ratio OT - multi-criteria decision making COIS- The authors declare no conflict of interest. EDAT- 2022/08/27 06:00 MHDA- 2022/08/27 06:01 PMCR- 2022/07/31 CRDT- 2022/08/26 01:12 PHST- 2022/06/23 00:00 [received] PHST- 2022/07/23 00:00 [revised] PHST- 2022/07/27 00:00 [accepted] PHST- 2022/08/26 01:12 [entrez] PHST- 2022/08/27 06:00 [pubmed] PHST- 2022/08/27 06:01 [medline] PHST- 2022/07/31 00:00 [pmc-release] AID - e24081056 [pii] AID - entropy-24-01056 [pii] AID - 10.3390/e24081056 [doi] PST - epublish SO - Entropy (Basel). 2022 Jul 31;24(8):1056. doi: 10.3390/e24081056.