Application of TOPSIS Method Based on Utility Theory in Financial Performance Evaluation of Listed Companies

ABSTRACT

Financial evaluation of listed companies is realized by taking debt paying ability, profitability and operation ability as evaluation standards with the aim of investigating financial situations of companies comprehensively and systematically. The paper puts forward an improved TOPSIS decision-making method. In this method, opinions of more subjective policy makers have been involved: decision makers’ evaluation of property utility rather than original data is applied; policy makers’ effect is reflected by fuzzy numbers in order to know values of fuzzy uncertainty. In the meantime, in view of inaccurate definition of utility values of property data by decision makers, fuzzy numbers are used to describe utility values of property data. Decision makers’ consideration about comprehensiveness and balance of property utility of optimal decision-making schemes is involved, while Ward analysis is further conducted to financial performances. At last, rationality and effectiveness of the method are verified through analysis of specific instances about financial performance evaluation.

Keywords: