DETERMINATION OF PROFITABILITY PERFORMANCES OF INDUSTRIAL SECTORS BY MEANS OF TOPSIS METHOD: APPLICATION OF TURKEY

DETERMINATION OF PROFITABILITY PERFORMANCES OF INDUSTRIAL SECTORS BY MEANS OF TOPSIS METHOD: APPLICATION OF TURKEY Vurl Cgliyn, Assoc. Prof. Dr. Selcuk University, Turkey Nuri Omurbek, Assoc. Prof. Dr. Esr Aksoy, MA Meltem Krtli, Ass. Profm. Dr. Süleymn Demirel University, Turkey Zeynep Ergen Isiklr, Res. Ass. Selcuk University, Turkey Abstrct Stock exchnges re ccepted the most importnt instruments for the regionl economies. The min reson for this is tht stock exchnges provide cpitl to spred to the bse nd, lso, enble the resource need of the investment pltforms, whose functionlity is registered, to be ble to be stisfied. Stock exchnges re formed due to forming supplydemnd blnce on certin sset nd to mnging the commercil ctivities. In this study the profitbility performnce exhibited by 39 industril sectors tht re being processed in Stock Exchnge Istnbul (BİST), in Turkey, in respect with the first hlf of the yer 204, ws exmined on the sectoril bsis in the frmework of the criteri determined, compred to the sme period of the lst yer. Hndling the Vrition of Net Sle Incomes, compred to the sme period of the previous yer; FAVÖK (profit, before the interest, tx, deprecition) Vrition; Vrition of the Essentil Activity Profit; Vrition of Net Profit, compred to the sme period of the previous yer; 2004/06 Equity Profitbility, Vrition Vlue of Equity Profitbility in the periods of 203/06-nd 204//06 s the criteri used in the study, they were nlyzed by the method of TOPSIS, mong the methods of multi criteri decision mking. As result, it ws seen tht the min metl industry showed the best performnce in terms of profitbility Keywords: Sectoril Performnce, TOPSIS 43

Introduction Along with globliztion, with the increse of competition between business enterprises, the creful use of the existing resources nd tht the business enterprises cn efficiently nd effectively sustin their ctivities hve gined importnce in this process. On this point, there is need for the nlysis of efficiency nd effectiveness tht is mngeril instrument in the use of resource (Oruç, 2008:). Tody, the finl im of business enterprises in terms of the scholrship finnce is to rise the mrket vlue of firm to the top level. At the sme wy, the desire of investor nd shreholder is to increse their gins. The most importnt elements in reching this finl im re to mke profit nd to be ble to mnge the risk tht will be endured in reching the profitbility imed, The level of profitbility nd risk determine the mrket vlue of firm. Blncing between risk nd profitbility, providing n optiml chnge is importnt. In this context, exmining the effect of the mngeril decisions relted to business enterprises on the profitbility hs importnce (Krdeniz nd İskenderoğlu, 20:65-66). On condition tht the mrkets re fully effective, for ll rel mrkets nd finncil mrkets, if the investment elements re considered, the im of n investor is to obtin profit tht is positive difference between the return tht will be obtined fter investment nd mrket return. The element enbling the opinion of investment to relize is evluted s profit. As result the first im of investor is to obtin profit (Demirel nd Hepkorucu, 204:3). Between the sectors tht re processed in stock exchnge mrkets, in performnce nlysis the method of multi criteri mking demission cn be pplied nd n evlution bout the generl sitution of stock exchnges cn be mde. Methods of Multi Criteri Mking Decision (MMCMD), with evluting the decision criterion more thn one, is the method providing to mke selection between lterntives md to put in order these lterntives (Timor, 200:6). In the problem of multi criteri mking decision, the methods such s Anlyticl Hierrchicl Process (AHP), Anlyticl Network Process (ANP), ELECTRE, TOPSIS, VIKOR, nd SAW tke plce in the literture s solution methods (Erginel, et l., 200:82). In this study, of the methods of multi criteri TOPSIS method is used nd this method is frequently used one in determining, putting in order, or in the studies of performnce evlution: Some of these studies re presented in the following Tble. 44

Tblo. Some studies, where TOPSIS method is used. Project Evlution Mhmoodzdeh et l.,(2007:35-40). Some studies, where TOPSIS method is used Loction Selection for Foreign Cpitl Krimi et l. (200:96-207). Investment Evlution of Service Qulity Pl nd Choudhury (2009:5-33). Wng nd Lee, ( 200:38-52), Akyüz et l, (20:73-92), Türkmen nd Çğıl, (202:59-78), Uygurtürk nd Korkmz, (202:95-5), Evlution of Finncil Performnce Şmiloğlu et l., (203: 263-280), Aytekin nd Skry, (203:30-47), Ömürbek nd Kıny, (203:343-363), Wu, Lin nd Tsi, (2008:255-263). Selection of Digitl Cmer Pwr nd Verm, (203:5-53). Selection of Supplier Önder nd Dğ, (203:56-74). Selection of Scholr Ablı et l, (202:259-272). Selection of Personnel Shih, Shyur nd Lee, (2007:80-803), Supçiller nd Çrpz, (20:-22). Topsis Method TOPSIS (Technique for Order Preference by Similrity to Idel Solution) is one of multi criteri mking decision. In the method, the problem of multi imed mking decision tht hs lterntives in the number of m nd criteri in number of n cn be shown with the points m in the spce of n-dimensions Hwng nd Yoon (98 ) formed TOPSIS Method ccording to the thought of the shortest distnce of the solution lterntive to the positive idel nd the furthest distnce to the negtive idel solution (Öktür, 2008:55 ). The ppliction of TOPSIS method includes solution process consisting of 6 phses nd its phses re s follows (Yoon nd Hwng, 995:40-4; Ünl, 2008:65; Demireli, 200:05). st Step: Forming the Decision Mtrix (A ) In the lines of decision mtrix, the decision points, whose dvntges re wnted to be put in order, tke plce, while in its columns, the evlution criteri tht will be used in mking decision. Decision mtrix is s follows: 45

A. =.. m 2 2 22 m2 n 2n... mn 2nd Step: Normlizing (R) the Decision Mtrix Normlized decision mtrix, utilizing the elements of mtrix A nd using the following formul, is clculted. r = i=,m; J=,,n m 2 R k= r r. =.. rm 2 kj r r r 2 22 m2 r n r 2n... rmn 3rd Step: Forming the Weighted Decision Mtrix (W) In this step, the elements of normlized decision mtrix re weighted in the direction of importnce to the criteri. In the direction of importnce given to the criteri, the vlue of weight ( w ) re determined ( n w i i= = ). After determining the weights, the elements in ech column of mtrix R re multiplied by the relevnt vlue wi nd mtrix V is formed. Mtrix V is shown s follows. v =w j. r, i=,..,m; j=,,,n i wr wr. V =.. wr 2 m w r 2 2 w r 2 22 w r 2 m2 wnr n w nr2 n... wnrmn 46

4th Step: Forming the ide (A*) l nd negtive idel (A-) solutions While idel solution consists of the best performnce vlues of the weighted normlized decision mtrix, negtive idel solution consists of the worst vlues. Finding the idel solution set is shown in the following eqution. Set tht will be clculted from the eqution * ' A = (mx v j J ),(min v j J cn be shown i i * * s { v v,, v * } A =. *, 2 n Finding the negtive idel solution set is shown in the following eqution. Set tht will be clculte from the eqution ' A = (min v j J ),(mx v j J cn be shown s i i = { v v v } A,,, 2 n 5th Step: A Clcultion of Distinction Criteri For clculting the distinction criteri, Euclidin Distnce Approch is utilized. The distnce of ech lterntive to the idel solution is: S * i S = n j= * 2 ( v v ) i=,..,m. j In similr wy, ech lterntive to the negtive idel solution is: i = n j= 2 ( v v ) i=,..,m. j 6th Step: Clcultion of the reltive closeness to the idel solution Clcultion of the closeness (C * i ) of decision points to the idel solution is shown in the following formul: * Si Ci = * S i=,,m. i + Si The criterion used is the shre of negtive distinction criterion in the overll distinction criterion. Here, tht the vlue C i * tkes plce in the rnge of O C * i nd C i * = indictes tht the relevnt lterntive is present on the positive idel solution point of the lterntive relted to C i * = 0. Evlution Of Profitbility Performnce Of The Industril Sectors Tht Are Processed In Stock Exchnge Istnbul (BIST) By Mens Of Topsis Method 47

In this section of the study exmining the performnce exhibited by 39 industril sectors tht re being in the Stock Exchnge Istnbul, Turkey, in respect with the first hlf of the yer 204 in the frmework of the criteri determined ccording to the sme period of the lst period on the sectoril bsis, the nlysis of profitbility performnces will be crried out by TOPSIS method. In the study 204/6 Sectoril Performnce Report of Gedik Ytırım Menkul Değerler A.Ş (Erdinç nd Gürcn, 204: ) ws used s resource nd dt were drwn from the report. The dt relted to the sectors were clculted in the computer medi by using Microsoft Office Excel 2007. The lterntives( sectors) to be evluted re Metl Min Industry, Investment Prtnership, Automotive Side Industry, Furniture, Cement, Building-Mteril, Textile, Pper, Chemistry, Informtics, Durble Consumption, Food, Enterprise Cpitl, Glss, Sttionery, Trnsporttion Logistics, Electricin Mteril, Dye, Mrketing, Technology, Oil, Fertilizer, Immovble Investment Prtnership (GMYO), Retil Trde, Pcking, Intermediry Firms, Mining, Telecom, Public Works Building, Energy, Aeronuticl, Drinks, Automotive, Medicine Helth, Holding, Service, Lether, Tourism, Hotel, nd Journlism. While future oriented evlution is mde, the most importnt criterion is tht how mny profits the country will obtin in the future. The criteri considered in this study re direct turnover or profitbility -oriented. Except for these criteri, the rtios such s ctivity rtios, cost rtions, nd turnover rte could be used s criterion. But, ultimtely, it is importnt whether these rtios increse the profitbility of compny or not. Becuse receivbles turnover rte (ADH) of firm, whose stock turnover rte (SDH) rises, flls most, if its profitbility decreses, using SDH nd ADH will not be meningful. Indeed, while future oriented evlution is mde, the most importnt criterion is tht how mny profits the compny will crete in the future (Erdinç nd Gürcn, 204:). In view of this, in the study the criteri determined in performnce evlution of industril sectors hve focused on profitbility rtio. The criteri used in prctice re Vrition of Net Sle Incomes compred to the sme period of the previous period, FAVÖK (Profit before interest nd deprecition)vrition, Vrition of Min Activity Profit, Vrition of Net Profit compred to the sme period of the previous period, 204/06 Equity Profitbility, nd vrition between equity profitbility in the periods of 203/06 nd 204/06. In the 204/6 sectoril performnce report of Gedik Ytırım Menkul Değerler A.Ş., since ordering of ech sector is mde in the direction of profitbility criteri determined, criterion weights were eqully tken. 48

Using the mtrix obtined in the report in TOPSIS method, the industril sector showing the best profitbility performnce tht is processed in BIST ws ttempted to be determined. Decision mtrix ws formed in terms of the vlues mde by Gedik Ytırım Menkul Değerler A.Ş. nd 39 sectors hd in terms of ech criterion (Tble 2). Tble 2. Ordering Vlues of Industril Sectors in Terms of Ech Criteri Order of Net Sle Vriti on Order of FAVÖ K vriti Order of EFK Vriti on Order of Net Profit Vriti on Equity Profitbili ty (204/06) Order of Equity Profitbili ty Vrition on MAIN METAL INDUSTRY 6 4 5 22 7 INVESTMENT PARTNERSHIP 7 4 3 20 AUTOMOTIVE SIDE INDUSTRY 5 8 8 3 8 9 FURNITURE 3 5 3 6 35 2 CEMENT 0 6 7 20 5 7 BUILDING MATERIAL 26 7 6 6 2 TEXTILE 3 3 2 5 30 6 PAPER 29 2 9 29 3 CHEMISTRY 2 2 8 6 8 INFORMATICS 2 6 8 2 0 2 DURABLE CONSUMPTION 6 0 4 6 5 FOOD 2 8 9 4 7 5 ENTERPRISE CAPITAL 23 20 20 2 8 4 GLASS 5 0 6 9 26 23 STATIONERY 7 34 37 TRANSPORTATION LOGISTIC 3 23 4 5 3 6 ELECTRICAL MATERIAL 4 9 9 22 33 28 PAINT 20 27 29 7 2 0 MARKETING 7 4 7 26 23 25 TECHNOLOGY 9 22 24 7 9 OIL 8 35 33 9 8 FERTILIZER 28 26 25 8 4 3 GMYO 27 30 26 0 3 4 RETAIL TRADE 4 2 23 24 25 22 PACKING 9 25 3 28 27 27 INTERMEDIARY FIRMS 38 3 5 25 2 24 MINING 33 5 22 30 5 32 TELECOM 34 24 27 29 7 3 PUBLIC WORKS BUILDING 32 28 28 23 9 26 ENERGY 8 34 35 27 39 2 AERONAUTICAL 2 32 36 32 32 30 DRINKS 22 9 2 36 28 39 AUTOMOTIVE 36 3 3 3 4 36 MEDICINE,HEALTH 25 29 30 33 3 29 HOLDING 24 33 32 35 24 35 SERVICE 39 39 39 2 37 20 49

LEATHER 30 37 37 37 34 34 TOURISM HOTEL 35 38 34 38 36 38 JOURNALISM 37 36 38 39 38 33 With the decision mtrix obtined, first of ll, normliztion process ws crried out nd, following it, since criterion weights re eqully tken, becuse it will nıt chnge the mtrix vlue, the next step of TOPSIS method, with forming the solutions of Idel (A* ) nd Negtive Idel (A - ), the Closeness Vlue (C * i ) ccording to the Idel Solution given below ws obtined. Tble 3. The closeness vlues (C * i ) ccording to the idel solution nd their ordering INDUSTRIAL SECTORS (C * I ) ORDERING INDUSTRIAL SECTORS (C * I ) ORDERING MAIN METAL INDUSTRY 0,77464 FERTILIZER 0,52267 2 AUTOMOTIVE SIDE INDUSTRY 0,7542 2 OIL 0,5962 22 INVESTMENT PARTNERSHIP 0,73462 3 GMYO 0,50000 23 CEMENT 0,7660 4 PACKING 0,46595 24 BUILDING MATERIAL 0,6794 5 RETAIL TRADE 0,4690 25 INTERMEDIARY 0,6786 CHEMISTRY 6 FIRMS 0,44086 26 INFORMATICS 0,6736 7 MINING 0,39857 27 TEXTILE 0,6707 8 TELECOM 0,38567 28 FURNITURE 0,6674 9 AERONAUTICS 0,36290 29 DURABLE CONSUMPTION 0,66384 0 ENERGY 0,35592 30 PUBLIC WORKS- 0,64078 PAPER BUILDING 0,3499 3 FOOD 0,63830 2 AUTOMOTIVE 0,34529 32 ENTERPRISE CAPITAL 0,6209 3 DRINKS 0,33355 33 MEDICINE- 0,6329 0,2553 GLASS 4 HEALTH 34 TRANSPORTATION L-LOGISTICS 0,5973 5 SERVICE 0,2472 35 STATIONERY 0,57789 6 HOLDING 0,2455 36 DYE 0,55486 7 LEATHER 0,2579 37 TOURISM- 0,54960 ELECTRICAL MATERIAL 8 HOTEL 0,0778 38 TECHNOLOGY 0,5335 9 JOURNALISM 0,0754 39 PAZARLAMA 0,534 20 When regrding to the ordering mde by Gedik Ytırım Menkul Değerler A.Ş ccording to ech criterion, the sectors ttrcting ttention with their positive performnces re summrized s follows (Erdinç nd Gürcn, 204:4 ) - When the tble is exmined it is generlly seen tht the building nd building relted sectors (Cement, Building Mterils, Min Metl Industry, nd Glss) exhibited better performnce - Pper sector is in the position of the best sector ccording to ordering of the vrition of Min Activity Profit 50

- Investment Prtnership Sector is in the position of the best sector ccording to FAVÖK Vrition. - Sttionery sector is in the position of the best sector ccording to ordering of Net Sle Vlue, nd in the position of sector hving the highest equity profitbility in respect with the period of 204/06 The sectors ttrcting ttention with their negtive performnces re summrized s follows (Erdinç nd Gürcn, 204:5 ) - It is seen tht holdings, in which number of compnies tke plce nd which re ctive in mny res, could not exhibit good performnce in the first hlf of the yer compred to the sme period of the lst yer. - In the medicine- helth sector, the negtive effect of rrngements relted to the prices is continuing to be seen. - It is seen tht the slowing observed in utomotive sector nd reflected on the finncil results. - The wek performnce Energy Sector, one of the most determintive sectors, showed ttrcts ttention. When the ppliction results of TOPSIS method re regrded to, it is seen tht Min Metl Industry tkes plce in the first order with the index vlue of 0.77464 it hd nd, journlism sector in the lst order with index vlue of 0,.0754 Conclusion When regrding to the results of TOPSIS method, Min Metl Industry took plce in the first order with the index, whose profitbility performnce is the highest. When it is generlly exmined, it is seen tht building nd building relted sectors (cement, building ) exhibited good performnce. Agin, in the sme wy, Investment Prtnership nd Automotive Side Industry re lso mong the sectors exhibiting high profitbility performnce. On the other hnd, it is seen tht holdings, holdings, in which number of compnies tke plce nd which re in ctive in mny re could not good performnce in the first hlf of the yer compred to the sme period of the lst yer. In the sme wy, utomotive sector nd energy sector, one of the most determintive sectors, showed wek performnce in the period considered. References: ABALI, Y.A., KUTLU, B.S. ve EREN, T., (202), Çok Ölçütlü Krr Verme yöntemleri ile Bursiyer Seçimi: Bir Öğretim Kurumund Uygulm, 5

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