Investing in Malaysian healthcare using technique for order preference by similarity to ideal solution

Abstract

The purpose of this research is to assess the financial performance of Malaysian Healthcare companies using the multi-criteria and decision-making method, namely technique for order preference by similarity to ideal solution (TOPSIS). The financial data of 20 companies in 2019 are retrieved from Datastream. For many years, ratios of financial aspects have been employed to analyse the companies’ financial performance. However, some studies indicate that the traditional ratio analysis is insufficient to measure a firm's financial performance. Thus, this paper employs the technique for order preference by similarity to ideal solution, or simply TOPSIS, to gain a more comprehensive result. The TOPSIS approach involves seven steps, utilizing significant ratios in financial aspect such as debt ratio, debt to equity ratio, current ratio, return on equity (ROE), acid-test ratio, earnings per share (EPS), and return on asset (ROA), as the criteria to evaluate the companies' financial performances. The result of this study ranks 20 healthcare companies in Malaysia and makes recommendations for investment-worthy companies to the investors, allowing the maximization of investment benefits. The results from this research are crucial for investors, companies, market participants, public and private policymakers to enhance their investment decision-making.

Evaluating Financial Performance of Food Service Companies: A TOPSIS-based Approach

“…The TOPSIS model is employed in this study to rank firms in the food sector and is recognized as a robust MCDM approach that yields reliable results with high computational efficiency (Hoe et al, 2020;Lukić et al, 2020). Consequently, numerous studies in the literature have shown considerable interest in utilizing the TOPSIS model to rank alternatives and identify optimal decision alternatives (Abd Rahim et al, 2020;Azhar et al, 2022;Deng et al, 2000;Fahami et al, 2019;Hoe et al, 2018Hoe et al, , 2019Hussain et al, 2020;Mandic et al, 2014;Wanke et al, 2016;Yildiz, 2020). Accurate performance measurement using TOPSIS is advantageous for decision makers as it equips them with valuable information to make well-informed choices.…”

Investing in Malaysian Consumer Product Companies Using TOPSIS

“…Relevant studies that have utilized TOPSIS as a methodology can be found in the works of (Abd Rahim et al, 2020;Deng et al, 2000;Hoe et al, 2018;Hussain et al, 2020;Mandic et al, 2014;Wanke et al, 2016;Yildiz, 2020). Additionally, studies conducted by Azhar et al (2022); Fahami et al (2019); Hoe et al, (2019; have also employed financial ratio analysis using TOPSIS to analyze the performance of the service, healthcare and telecommunications industries within the context of Malaysia. The ability of the TOPSIS method to assign weights to each criterion based on its importance while considering the uncertainty, subjectivity, and complexity of the decision-making process enables investors to rank companies from worst to best.…”