The comparative study of ranking company's efficiency based on data envelopment analysis (DEA) and traditional methods (DuPont's method)

Abstract

In this research, we combine the process of hierarchy analysis and data envelopment analysis (DEA) to eliminate the restriction of traditional analysis based on financial ratios. At first we evaluate the expert's ideas in each industry by the process of hierarchy analysis the importance of different financial ratios were analyzed by the process of different financial ratios were analyzed by the process of hierarchy analysis. Company's relative efficiency was calculated by the combination of DEA and financial ratios, and the companies were ranked. Statistical universe was the companies in three industries in SEC Tehran : cement, automobile and pharmacy. Hypothesis was evaluated based on spearman's correlation coefficient. Ranking based on DEA and DuPont's method were compared. A significant difference was observed in DEA and DuPont's ranking. The correlation was direct and its intensity was less than % 30