Assessing The Financial Performance Of Construction Companies Using The Entropy Method

Abstract

The complex and dynamic nature of the construction sector forces stakeholders (construction partners) to look for ways to understand these businesses' financial performance. In order to give business managers, owners, shareholders, and financing agencies a useful instrument with which to assess these companies' performance, an evaluation methodology for construction company performance is presented in the current research. The developed following this theory in the proper decision-making of the company's management.

    The current research seeks to evaluate a company's financial performance from the service sector in Iraq using the entropy method, additionally by choosing on a group of financial ratios that accurately depict the financial characteristics of contracting firms

in addition to the measure of the added market value, which are: - 1- "Working capital / current liabilities 2- Gearing 3. RETURN ON ASSETS 4- Cash Flow/ Current Liabilities (5 - PBIDT/Net Assets 6- Earnings Per Share (EPS) 7- Market Value Added (MVA) of Vital Indicators For the companies' financial performance. The company's financial accounts for the last seven years were collected from the official website of the Iraqi market.

The study discovered that the ROA ratio, which measures the company's liquidity condition and being the element with the highest objective weight throughout all years, is the most important one for evaluating financial efficiency., followed by the high relative weight of the PBIDT/N. A ratio. In light of the fact that the company's profit nearly never falters, this is a profitability indicator that contributes more than others. The indicators of profit before depreciation, taxes, and interest are the primary distinction between this model and all others.