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A study on the financial efficiency analysis method by redesigning the DEA model

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  • Jeong-Hun Sin

    (Graduate School of Hanyang University)

Abstract

The purpose of this study is to measure the financial efficiency of firms considering both input and procurement capital. We propose a new method called three-dimensional data envelopment analysis model and conducted an efficiency analysis of 33 companies in Korea manufacturing auto parts. The results of the study are summarized as follows. Even if the business performance generated by the company is more efficient than the input assets, many inefficient companies exist compared with the procurement capital. Meanwhile, management performance compared with input assets was inefficient; however, there were also companies that were efficient in terms of procurement capital. Therefore, when analyzing the efficiency of a company, efficiency methodology and measurement values that consider both input and procurement capital are needed. This study presents a new measurement methodology based on this point and analyzes the current financial situation of each decision-making unit through return-to-scale analysis and suggests financial improvement direction.

Suggested Citation

  • Jeong-Hun Sin, 2020. "A study on the financial efficiency analysis method by redesigning the DEA model," OPSEARCH, Springer;Operational Research Society of India, vol. 57(2), pages 347-363, June.
    • Handle: RePEc:spr:opsear:v:57:y:2020:i:2:d:10.1007_s12597-019-00433-9
    DOI: 10.1007/s12597-019-00433-9
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    References listed on IDEAS

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    More about this item

    Keywords

    Data envelopment analysis; Efficiency; Three-dimensional data envelopment analysis;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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