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Biplots for displaying multidimensional financial performance data graphically

Author

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  • N J le Roux
  • S Gardner
  • P Olivier

Abstract

Invariably financial performance of an enterprise is not judged on a single criterion but is described in terms of various related financial performance indicators. Financial decision makers are thus typically confronted with multidimensional data. This paper demonstrates to financial managers several uses of the biplot for displaying multidimensional data graphically. It is shown that biplots not only serve in understanding multidimensional data better but also might reveal features of such data not perceptible by graphing each variable on its own.Two different types of biplots are discussed: One for describing variation in multidimensional data and the other for separating different groups optimally. The first of these types of biplots is applied to a data set originating in risk management and the second to a data set where, on the basis of various financial ratio indicators, the aim is to separate enterprises in danger of financial failure within a year from those not in such danger. In the latter example a distinction is also made between companies classified as manufacturing enterprises and those classified as trading enterprises.

Suggested Citation

  • N J le Roux & S Gardner & P Olivier, 2003. "Biplots for displaying multidimensional financial performance data graphically," South African Journal of Accounting Research, Taylor & Francis Journals, vol. 17(1), pages 41-64, January.
    • Handle: RePEc:taf:rsarxx:v:17:y:2003:i:1:p:41-64
    DOI: 10.1080/10291954.2003.11435105
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