Int. J. Fuzzy Syst.
DOI 10.1007/s40815-016-0142-8
Combining Fuzzy AHP and Fuzzy TOPSIS with Financial Ratios
to Design a Novel Performance Evaluation Model
Meysam Shaverdi1 • Iman Ramezani2 • Reza Tahmasebi3 • Ali Asghar Anvary Rostamy4
Received: 29 January 2015 / Revised: 30 December 2015 / Accepted: 5 January 2016
 Taiwan Fuzzy Systems Association and Springer-Verlag Berlin Heidelberg 2016
Abstract Financial performance evaluation is a very
crucial process for industries in current highly competitive
environment. Therefore, designing an accurate and appro-
priate performance evaluation framework is beneficial for
insiders and also shareholders of a company. To evaluate
financial performance, we need to consider some financial
indicators that reflect the competitiveness of a company.
There are many financial indicators and criteria that are
vague and can be regarded as a fuzzy multiple criteria
decision-making (MCDM) problem. In this paper, we
developed a new financial performance evaluation frame-
work to rank the companies in Iranian petrochemical
industry based on fuzzy MCDM approach. To achieve this
aim, firstly, the main criteria are identified by compre-
hensive literature review and experts’ opinion. Then, a
hierarchical financial performance evaluation model is
structured using main financial criteria and their sub-cri-
teria. We used fuzzy analytic hierarchy process to deter-
mine the weights of the criteria. Then companies are
ranked using fuzzy AHP and fuzzy TOPSIS comparatively.
The results indicate that the obtained ranks of the
& Ali Asghar Anvary Rostamy
anvary@modares.ac.ir
1
Department of Finance and Management Science, Edwards
School of Business, University of Saskatchewan, Saskatoon,
SK S7N 5A7, Canada
2
Department of Industrial Engineering, Sharif University of
Technology, Tehran, Iran
3
Faculty of Management and Accounting, University of
Tehran, Farabi Campus, Qom, Iran
4
Department of Accounting, Faculty of Management and
Economics, Tarbiat Modares University, Tehran, Iran
companies by these methods are almost the same with
respect to their own sectors.
Keywords Fuzzy AHP (FAHP)  Fuzzy TOPSIS  Multi-
criteria decision making (MCDM)  Performance
evaluation  Financial ratios
1 Introduction
Organizational performance is an indicator which measures
how well an organization accomplishes its objectives [1].
One of the most important parts of organizational perfor-
mance is financial performance. In the current competitive
global market, assessing the financial performance of a firm
or industry has a crucial importance not just for managers,
creditors, and current/potential investors but also for the
companies taking place in the similar industry. Organiza-
tion or sector performance evaluation is generally defined
within the area of financial analyses. As the term of
financial performance is considered under various mean-
ings like return, productivity, output, and economic
growth, using the financial ratios in the performance
evaluation process can be applicable for both companies
and related sectors. Financial ratios extracted from the data
in income statement and balance sheets are considered as
crucial measurement tools in determining performance and
financial assets of firms. For long time, a huge number of
studies in the literature have indicated the benefits of the
financial ratios [2, 3]. In various studies related to financial
performance evaluation, different index and criteria have
been introduced by large numbers of researchers during
last years. In the financial performance review, many
studies are generally considered defining the relationships
among the financial index and also the impact of these
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index on the performance of firms that will be described in
literature review section.
For developing an applicable financial performance
evaluation model, we need to define a suitable and reliable
framework based on past studies and reviewed index and
criteria. Consequently, evaluating the index required a
reliable quantitative approach to rank and assess the index
as well as the firms. Thus, multi-criteria decision-making
(MCDM) models can be a very useful and effective tool for
this aim to make a better judgment on index and accord-
ingly a good performance evaluation of financial status of
the firm. A good decision-making model requires to tol-
erate ambiguity that usually is a common characteristics in
many decision-making problems [4]. Usually, decision
makers provide uncertain answers compared to exact ones,
so the transformation of qualitative preferences to point
estimates may not be sensible. Analytical hierarchy process
(AHP) that requires the selection of arbitrary values in pair-
wise comparison may not be sauciest and uncertainty
should be considered in some or all pair-wise comparison
values [4]. When dealing with group decision making, it is
necessary to consider the diverse types of uncertainty.
Fuzzy set theory and its natural ability to deal with
uncertainty could provide the needed flexibility to handle
the uncertainty factors in decision making [5]. Since the
fuzzy linguistic approach can take the optimism/pessimism
rating attitude of decision makers into account, linguistic
values, whose membership functions are usually charac-
terized by triangular fuzzy numbers, are recommended to
assess preference ratings instead of conventional numerical
equivalence method [6]. As a result, the fuzzy MCDM
should be more appropriate and effective than conventional
MCDM in real practice where an uncertain pair-wise
comparison environment exists.
The main objective of this study is to develop a new
decision-making model, by enabling the decision makers to
measure the performance of petrochemical firms by the
application of multi-criteria decision making. This study
suggests a framework for assessing the financial perfor-
mance, which combines two main MCDM models: analytic
hierarchy process (FAHP) and the technique for order
performance by similarity to ideal solution (TOPSIS) based
on fuzzy approach. The proposed model helps investors
and financial analysts about evaluation and outcomes of
those firms to make a better decision for their future
financial investment. The new fuzzy MCDM approach
ranks the index of proposed framework and then evaluates
the main petrochemical companies regarding to the index.
The proposed model is constituted based on comprehensive
review of literature and extracting the main index and
modifying the model based on experts’ opinions.
The rest of this paper is organized as follows. Section 2
gives literature review of performance evaluation models.
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International Journal of Fuzzy Systems
In the third section, financial performance measures are
defined, and in the fourth section, firstly, basics of fuzzy
number and fuzzy sets is defined, and then fuzzy AHP and
fuzzy TOPSIS methodologies are explained, respectively.
An application of proposed model is given in section five.
Section six presents result and analysis of the finding and
calculations. Finally, in section seven, results are presented
and suggestions for the future studies are clarified. This
section concludes the paper.
2 Literature Review on Financial Performance
Evaluation
There is abundant literature on financial performance
evaluation models using fuzzy MCDM models. Wang
evaluated financial performance of domestic airlines in
Taiwan with fuzzy TOPSIS method [7]. Lee et al. devel-
oped an approach based on the fuzzy analytic hierarchy
process (FAHP) and balanced scorecard (BSC) to evaluate
an IT department in the manufacturing industry in Taiwan
[8]. The BSC concept was applied to define the hierarchy
with four major perspectives (i.e., financial, customer,
internal business process, and learning and growth), and
performance indicators were selected for each perspective.
An FAHP approach was then proposed in order to tolerate
vagueness and ambiguity of information. An FAHP infor-
mation system is finally constructed to facilitate the solving
process. Gumus developed a two-step methodology to
evaluate hazardous waste transportation firms containing
the methods of fuzzy AHP and TOPSIS, a numerical
example was presented to clarify the methodology [9]. Wu
et al. proposed an FMCDM approach to evaluate banking
performance [10]. By drawing on the four perspectives of a
BSC, in their research they first summarized the evaluation
indexes synthesized from the literature relating to banking
performance. Then, to screen these indexes, 23 indexes fit
for banking performance evaluation were selected through
expert questionnaires. Furthermore, the relative weights of
the chosen evaluation indexes were calculated by FAHP
and the three MCDM analytical tools of SAW, TOPSIS,
and VIKOR were, respectively, adopted to rank the bank-
ing performance and improve the gaps with three banks as
an empirical example. The analysis results highlight the
critical aspects of evaluation criteria as well as the gaps to
improve banking performance for achieving aspired/de-
sired level. It shows that the proposed FMCDM evaluation
model of banking performance using the BSC framework
can be a useful and effective assessment tool. Sun devel-
oped an evaluation model based on FAHP process and
TOPSIS by similarity to ideal solution, fuzzy TOPSIS, to
help the industrial practitioners for the performance eval-
uation in a fuzzy environment where the vagueness and
M. Shaverdi et al.: Combining Fuzzy AHP and Fuzzy TOPSIS with Financial Ratios to Design a Novel Performance…
subjectivity are handled with linguistic values parameter-
ized by triangular fuzzy numbers [11].
Yu et al. developed an evaluation model-based AHP,
fuzzy sets, and TOPSIS to rank e-commerce websites in
e-alliance [12]. The AHP was applied to analyze the
structure of ranking problem and to determine weights of
the criteria, fuzzy sets were utilized to present ambiguity
and subjectivity with linguistic values parameterized by
triangular fuzzy numbers, and TOPSIS method is used to
obtain final ranking. Yalcin et al. proposed a new financial
performance evaluation approach using fuzzy multi-criteria
decision-making methods for financial performance eval-
uation of Turkish manufacturing industries [3]. For doing
the research they used accounting-based financial perfor-
mance measures and value-based financial performance
measures as financial performance measures. They used
fuzzy AHP to construct evaluation criteria hierarchy and
used TOPSIS and VIKOR as ranking tools [3].
Ishizaka and Nguyen [13] used fuzzy AHP method to
facilitate selection of student bank accounts. Yilmaz and
Konyar [14] used TOPSIS to evaluate the financial per-
formance of 9 lodging companies in Istanbul stock
exchange. Mandic et al. [15] suggested a fuzzy multi-cri-
teria model that facilitated the evaluation of the financial
performance of banks. The study was conduct of the
banking sector in Serbia during 2005 and 2010. Wang
developed an evaluation model of financial performance
using fuzzy TOPSIS in Taiwan container shipping com-
panies [7]. Shen and Tzeng [16] proposed an integrated
two-stage inference system to predict the financial perfor-
mance of banks. Malichova and Durisova [17] evaluate
financial performance of enterprises operating in IT sector
based on financial indicators. O’Neill et al. [18] consider
quality management approaches and their impact on firms‘
financial performance. They found that firm quality man-
agement orientation provides a statistically significant
financial performance advantage over those firms who do
not engage in quality management.
3 Theoretical Background
3.1 Financial Performance Measures
Financial ratios and measures are very good ways to
evaluate a company’s performance. In this paper, they were
used as input criteria of decision-making methods. To
evaluate performance of the companies, traditional and
modern financial performance measures will be used to
evaluate the performance of companies. In the following,
the sub-criteria measures of each main-criterion are briefly
defined.
3.1.1 Traditional Accounting-Based Financial
Performance Measure
In this section, traditional accounting-based financial per-
formance measures such as ROA, ROE, EPS, and P/E will
be explained.
3.1.1.1 Return on Assets (ROA) This measure determines
the efficiency of applying resources for earning. It can be
calculated using the following formula [19]:
Net income available to stockholders
ROA ¼ :
Total assets
Another way to measure ROA is to multiply profit margin
by total assets turnover so [20]
ROA ¼ Profit margin  Total assets turnover
Net income Sales
¼  :
Sales Total assets
ROA indicates how much the profit an enterprise is
able to generate for each dollar of assets invested [21]. As
seen from the ROA formulation, the higher return means
the better profit performance for a company. ROA gives
an idea how efficient the management applies its assets to
create earnings. In fact, ROA is an easy way of com-
paring a firm’s performance with that of other competi-
tors [3].
3.1.1.2 Return on Equity (ROE) ROE determines the
profitability with the invested money of shareholders and it
is used to measure the real cost of spending money [22].
ROE can be determined with different ways but the most
common way to calculate ROE is as follows [23]:
ROE ¼ ROA  Equity multiplier
Net income available to common stockholders
¼ :
Stockholders equity
ROE can be determined by multiplying the ROA
by the equity multiplier which indicates the ratio of
assets to common equity so the formula is as follows
[20, 24]:
ROE ¼ ROA  Equity multiplier
Net income Total assets Net income
¼  ¼ :
Total assets Common equity Common equity
Generally, relatively higher ROE rates indicate that
companies sell at higher multiple of book value than
companies with low returns. Because only the stock-
holder’s equity appears in the denominator, the measure is
directly influenced by the amount of debt which a company
is using to finance assets. The higher the ratio, the more
efficient management of the equity base utilization and also
the better return to its investors [23].
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3.1.1.3 Earnings Per Share (EPS) The indicator of each
outstanding share of a company is called EPS. The basic
EPS can provide a measure of the interests of each ordinary
share of a parent entity in the performance of the entity
(Board [25]. EPS is used to answer the question of if a
company is growing and it can be calculated by [26]
Net income available to shareholders
EPS ¼ : that they were very satisfied with EVA which lead to
Number of outstanding shares
A good way to specify whether a company is growing
would be to look at their EPS compared to previous years.
It is often considered as the only most important index to
determine a company’s profitability [3].
3.1.1.4 Price Earnings Ratio (P/E) Under certainty and
while there are perfect markets, the price of a security is
equal to the present value of the future cash flows and
under assumptions of 1. K: this variable represents constant
dividend payout ratio; 2. g: this variable shows constant
growth in earnings per share; and 3. r: it shows constant
riskless rate (r), P/E can be calculated by Gordon–Shapiro
valuation equation as follows [27]:
K EVAt ¼ NOPATt  ðkt  Ct1 Þ:
P=E ¼ :
rg
But the above formula usually can be adjusted in the
absence of further investment and consider permanent earn-
ings. The P/E ratio indicates how much investors are willing to
pay for buying shares per dollar of current earnings. It is the
best index to analyze performance while there are other factors
that an investor should consider them before making an
investment decision. The P/E ratio can be calculated by the
following formula [20]:
Price per share
P=E ¼ : agement while there is an excess of capital invested by
Earnings per share
Since earnings per share are reported in the income
statement, the market value per share of stock is not
reported in the fiscal statements, but should be determined
from financial new source. The main idea of P/E ratio is
what the market is willing to pay for the firms’ profits [3].
3.1.2 Modern Value-Based Performance Measures
There are also some other criteria to measure financial
performance and they are called modern value-based
financial performance measures. Performance measures
such as CFROI, EVA, and CVA are some of Modern
Value-based Performance Measures. The Modern Value-
based financial performance measures are as follows:
3.1.2.1 Economic Value Added (EVA) Economic Value
Added (EVA) is a developing concept to asses financial
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International Journal of Fuzzy Systems
performance [28]. For the first time, Stern Stewart intro-
duced concept of EVA (Services, [29]. It is the base for
theory of evaluating enterprise value which received
attention by many of researchers [30]. It is the difference
between net operating income of a company after taxes and
its cost of capital of both equity and debt and it was used by
many of giant corporate such as Coca-Cola and AT & T
sudden popularity of EVA [31]. It is a single period and
accounting-based measure of corporate performance and
there are some ways to calculate EVA that can be
explained as follows [32]:
One way for determining EVA for each year is multi-
plying company’s economic book value of capital C (Ct-1)
at the beginning of the year by the difference between its
return on Capital r (rt) and its cost of capital k (kt) and It
can be written as follows:
EVAt ¼ ðrt  kt Þ  Ct1 :
Another way that may make more sense is to think that
EVA is the difference between net operating profit of a firm
after taxes (NOPATt) and its cost of capital:
3.1.2.2 Market Value Added (MVA) Market Value
Added (MVA) is a market-generated number and it can be
measured as follows [32]:
It can be determined by subtracting the capital invested
in a company C from the sum V of the total market value of
the firm’s equity and the book value of its debt:
MVAt ¼ Vt  Ct :
MVA is usually the present value of a series of EVA
values [33] or it is a measure of value created by man-
shareholders [34].
Furthermore, MVA is the best external criteria to assess
management performance in the long term and can be
calculated as follows [35]:
MVA ¼ Total market value  Total capital employed:
Theatrically, there is a direct connection between MVA
and EVA [36]. MVA is closely related to the measure in
that it is the present value of all expected future EVA and
may be thought of as the net present value of the firm [37].
It is also believed that MVA is a reasonable proxy for the
measurement of owner wealth maximization while taking
into consideration the relative risk-based costs of doing so.
3.1.2.3 Cash Flow Return on Investment (CFROI) Cash
flow return on investment (CFROI) is an internal rate of
return and it can bring a consistent basis to evaluate
companies regardless of their size and this characteristic
M. Shaverdi et al.: Combining Fuzzy AHP and Fuzzy TOPSIS with Financial Ratios to Design a Novel Performance…
makes it very popular among money management com-
munity to compare companies against each other to make
investment decisions [38].
The following five-step process is used to determine
CFROI [39]:
1. Determine the average life of the firm’s assets.
2. Determine gross cash flow.
3. Determine gross cash investment.
4. Determine sum of all non-depreciating assets such as
land, working capital, and other assets.
5. Solve the acquired equation for CFROI.
CFROI illustrates whether the firm has earned returns
superior to its cost of capital and therefore created value for
this shareholders. In this sense, it shows an important
similarity to EVA. Both measures assume that management
creates value by earning returns on invested capital greater
than the cost of capital. For the owners of the company or
shareholders, high CFROI is an advantage because less
money should to be invested to create future growth.
3.1.2.4 Cash Value Added (CVA) Cash Value Added
(CVA) is a measure for calculating the amount of cash a
company generates through its operations. CVA can be
measured as follows [22]:
CVA ¼ Gross cash flows ðoperatingÞ
 Economic depreciation  Capital charge:
Capital expense allocates a cost for the usage of all capital
the company is using, which is equal to the company’s cost of
capital times the amount of gross capital invested. Another
calculation method for CVA considers the company’s prof-
itability measured as a difference between CFROI and
WACC. It is named indirect calculation by BCG [40].
3.1.2.5 Current Ratio Current ratio is calculated by
dividing current assets by current liabilities [41].
3.1.2.6 Quick Ratio Quick ration is a variation of the
current ratio which has in the numerator those current
assets of the firm that could convert quickly into cash [41].
3.1.2.7 Debt Ratio Debt Ratio is used to measure the
amount of liabilities usually long-term debt and can be
calculated by dividing total liabilities by total assets [41].
3.1.2.8 Inventory Turnover Ratio This measure indicates
the number of times per period inventory was turned over
(meaning that sold) and it can be found using the following
equation:
Cost of goods sold
Inventory turnover ratio ¼ :
Average inventory
3.1.2.9 Total Asset Turnover Ratio It measures the ratio
of total operation revenue in total assets:
Total operating revenue
Total asset turnover ratio ¼ :
Total assets
3.1.2.10 Fixed Asset Turnover Ratio It measures the
ratio of total operation revenue in total assets:
Total operating revenue
Fixed asset turnover ratio ¼ :
Net total assets
It is one of activity ratios which measure how effec-
tively, companies use their assets [42].
3.1.2.11 Accounts Receivable Turnover Ratio It mea-
sures ability to collect debts for each company (Weygandt
et al. [43]):
Net receivable sales
Receivable turnover ratio = :
Average net receivables
3.2 Fuzzy Set and Fuzzy Number
The fuzzy set theory was introduced by Zadeh [44]. Fuzzy set
theory provides a mathematical framework in which vague
conceptual phenomena can be studied [45]. Fuzzy set theory is
a suitable tool to reinforce the comprehensiveness and cor-
rectness of the decision-making stages. Fuzzy set theory is an
important approach to provide a measure while there is
uncertainty of concepts that are associated with human
beings’ subjective judgments including linguistic terms, sat-
isfaction level, and importance level that are often vague [46].
A variable whose values are not quantitative but phrases in a
natural language is a linguistic variable. The concept of a
linguistic variable is very beneficial in dealing with situations,
which are too complicated or not well defined to be rationally
described in usual quantitative expressions [45]. For example,
some of lingual expressions are usually regarded as natural
representations of preferences or judgments, human’s lingual
expressions such as satisfied, fair, dissatisfied are among them.
Herrera and Herrera-Viedma has shown that linguistic terms
are intuitively more convenient to use when decision makers
express the subjectivity and imprecision of their evaluation
[47]. For these reasons, the fuzzy set theory is used accom-
panied with AHP in this paper.
Fuzzy numbers are particular categories of fuzzy
quantities that are equal to a simplification of a real number
r. For each fuzzy quantity, M(x) indicates the closeness of
M(x) estimator r. A fuzzy number is normally described
[48]. A real number can normally be described with a fuzzy
number in which each grade of membership values
between 0 and 1. Depending on situation, different fuzzy
numbers can be used and among different types of fuzzy
numbers while triangular and trapezoidal fuzzy numbers
are most common fuzzy numbers that are used. Triangular
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 International Journal of Fuzzy Systems

fuzzy numbers (TFNs) are usually used because of their ability to properly consider the inherent uncertainty and care-
calculation easiness in representing the linguistic variables, lessness of pair comparisons [53].
here M~ ¼ ðl1 ; m1 ; u1 Þ is used to represent TFN and mem- Fuzzy AHP is developed to resolve the expanded hierar-
bership function lM~ ðxÞ : R ! ½0; 1 of TFN is represented chical issues. Scholars of decision making realized that dis-
as follows [48]: tanced judgment is more compelling than rigid judgments.
8 The reason is that individuals often cannot explicitly express
> xl
>
> lxm their preferences because of fuzzy nature of comparison
<m  l
lM~ ðxÞ ¼ x  u ; ð1Þ process [51]. The relative importance specified by the AHP
>
> mxu decision makers is oral and it is vague. Decision makers often
>m  u
:
0 otherwise like to use oral presentation of their preferences rather than
numerical values and the nature of pair comparisons makes
where l and u stand for the lower and upper value, they cannot explicitly express their opinions about priorities.
~ and m is the mid-value of
respectively, of the support of M, In such conditions, the best solution is making decisions based
~
M. The parameters l, m, and u that describe a fuzzy number upon multiple goals and conditions to gain a rather suit-
indicate the smallest possible value, the most promising able level of achievement. These deficiencies show that the
value, and the largest possible value, respectively. A tri- nature of decision making is full of complexities and ambi-
angular fuzzy number M ~ is shown in Fig. 1 [48, 49]. guities in most minor to most major cases, most decisions are
Figure 1 shows a triangular fuzzy number [48]. made in a fuzzy environment. So, using this method can
reduce ambiguities of decisions made [54].

4 Methodology 4.1.2 Methodology of Fuzzy AHP

In this section, the methodology of this paper will be In this study, the extent of FAHP which was originally
presented; at first, a review on basic concepts of fuzzy introduced by Chang is applied, [55]. Considering that X ¼
numbers and fuzzy sets will be done, then the fuzzy AHP fx1 ; x2 ; . . .; xn g is an object set, and G ¼ fg1 ; g2 ; . . .; gn g is
and fuzzy TOPSIS methodologies will be done. a goal set, based on the method of Chang’s extent analysis,
each object is taken and extent analysis for each goal is
4.1 Fuzzy AHP performed mutually. Therefore, m extent analysis values
for each object can be gained, with the following signs:
4.1.1 Fuzzy AHP Literature Review
Mg1i ; Mg2i ; . . .; Mgmi ; i ¼ 1; 2; . . .; n:
Analysis Hierarchical Process (AHP) is a tool for making In which Mgji ðj ¼ 1; 2; . . .; mÞ all are TFNs. The steps of
decision based on multi-criteria decision making and it was Chang’s extent analysis is in the following [55]:
first proposed by Saaty [50]. Since introduction of AHP, it has
Step 1 The value of fuzzy synthetic extent of i.th
been one of the most useful multi-criteria decision-making
objective is defined as
tools for decision making and researchers. Although it records
" #1
knowledge in complex form, the conventional AHP is unable X n n X
X m
to reflect the way human thinks [51]., the conventional AHP sk ¼ mgj i  mgj i : ð2Þ
j¼1 i¼1 j¼1
becomes confusing while it uses an exact yardstick for com-
paring the opinions of decision makers [52]. Some researchers Pm j
To calculate value of j¼1 Mgi , the fuzzy addition
criticize AHP for using lopsided judgmental scales and lack of operation of m extent analysis values for a special matrix is
performed such as
" #
Xm X
m X
m X
m
Mgij ¼ ; mj ; uj ð3Þ
j¼1 j¼1 j¼1 j¼1
hP Pm Pm i1
m
and to obtain j¼1 ; j¼1 mj ; j¼1 uj , at the first the
fuzzy addition operation of Mgji ðj ¼ 1; 2; . . .; mÞ values is
performed such as
!
n X
X m X
n X
n X
n
Mgij ¼ li ; mi ; ui : ð4Þ
i¼1 j¼1 i¼1 i¼1 i¼1
Fig. 1 Triangular fuzzy function

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M. Shaverdi et al.: Combining Fuzzy AHP and Fuzzy TOPSIS with Financial Ratios to Design a Novel Performance…

After it the inverse of the above vector is calculated as Step 4 Using normalization, the normalized weight
follows: vectors are
" #1  
Xn X m
1 1 1 W ¼ ðdðA1 Þ; dðA2 ; . . .; dðAn ÞÞÞT ; ð11Þ
j
Mgi ¼ Pn ; Pn ; Pn : ð5Þ
i¼1 j¼1 i¼1 ui i¼1 mi i¼1 li where W is a non-fuzzy number.

Step 2 While M1 ¼ ðl1 ; m1 ; u1 Þ and M2 ¼ ðl2 ; m2 ; u2 Þ are 4.2 Fuzzy TOPSIS

two triangular fuzzy numbers, the degree of probability of
M2 ¼ ðl2 ; m2 ; u2 Þ  M1 ¼ ðl1 ; m1 ; u1 Þ is defined as Assigning a precise performance rating to an alternative for
 
VðM2  M1 Þ ¼ sup minðlm1 ðxÞ; lm2 ðyÞÞ ð6Þ the criteria under consideration is often difficult for a
decision maker. Fuzzy is used to assign the relative
and it can be presented as follows: importance of the criteria using fuzzy numbers instead of
VðM2  M1 Þ ¼ hgtðM1 \ M2 Þ ¼ lM2 ðdÞ ð7Þ precise numbers [56]. Here, Fuzzy Topsis is used for final
ranking and the following section described the fuzzy
VðM2  M1 Þ ¼ hgtðM1 \ M2 Þ ¼ lM2 ðdÞ TOPSIS methodology [57, 58]. Every MCDM problem can
8
> 1 m2  m1 be expressed in matrix format as Eqs. (12) and (13).
<
0 l 1  u2 2 3
¼ l1  u2 :
>
: otherwise A1 x~11 x~12 x~13    x~1n
ðm2  u2 Þ  ðm1  l1 Þ A2 6 7
6 x~21 x~22 x~23    x~2n 7
ð8Þ A3 6 x~31 x~32 x~33    x~3n 7
6
7; ð12Þ
.. 6 .. .. .. .. .. 7
. 4 . . . . . 5
Figure 2 [55] illustrates Eq. (6) in which d is the ordinate Am x~m1 x~m2 x~m3    x~mn
of the highest intersection point D between lM1 and lM2 .
To compare M1 and M2, we need both the values of ~ ¼ ½w
W ~1 ; w
~2 ; w ~n ;
~3 ; . . .; w ð13Þ
VðM1  M2 Þ and VðM2  M1 Þ.
where x~ij ; i ¼ 1; 2; . . .; m; j ¼ 1; 2; . . .; n, Ai, i = 1, m
Step 3 For a convex fuzzy number the degree possibility
represent m alternatives and w ~j ; j ¼ 1; 2; . . .; n are
to be greater than k convex fuzzy Mi ði ¼ 1; 2; . . .; kÞ
weighting factors of criteria and linguistic triangular fuzzy
numbers can be defined by
numbers are denoted by xij ¼ ðaij ; bij ; cij Þ. Note that xij is
VðM  M1 ; M2 ; . . .; Mk Þ the performance rating of the ith alternative, Ai, with
¼ V ½ðM  M1 Þ and ðM  M2 Þ and . . .ðM  Mk Þ : ð9Þ ~j represents the weight
respect to the jth criterion, Cj and w
¼ minVðM  Mi Þ; i ¼ 1; 2; 3; . . .; k of the jth criterion, Cj. The normalized Fuzzy decision
matrix is denoted by R~ and it is shown as Eq. (14):
Suppose that dðAi Þ ¼ minVðSi  Sk Þ for k ¼  
1; 2; . . .; n; k 6¼ i then the weight vector can be given by R~ ¼ r~ij mn : ð14Þ
W 0 ¼ ðd 0 ðA1 Þ; d 0 ðA2 ; . . .; d0 ðAn ÞÞÞT : ð10Þ The weighted Fuzzy normalized decision matrix is
shown in Eq. (15):
In the above equation, Ai ¼ ði ¼ 1; 2; . . .; nÞ are 2 3 2 3
n elements. v~11 v~12    v~1n ~1 r~11 w
w ~2 r~12    w~n r~1n
6 v~21 v~22 v~m1 v~2n 7 6 w ~2 r~22    w~n r~2n 7
6 7 6 ~1 r~21 w 7
6 .. .. .. .. 7 ¼ 6 .. .. .. .. 7:
4 . . . . 5 4 . . . . 5
v~m1 v~n2 v~m1 v~mn ~12 r~m2    w
~1 r~m1 w
w ~1n r~mn
ð15Þ
The advantage of using Fuzzy numbers is assigning the
relative importance of the criteria using Fuzzy numbers
instead of precise numbers. This method can be used to
solve the group decision maker problem under Fuzzy
environment. Given the above Fuzzy theory, the proposed
Fuzzy TOPSIS procedure is then defined as follows:
The weighted Fuzzy normalized decision matrix is
shown in Eq. (15):
Step 1 Choose the appropriate linguistic variables ðwj ; j ¼
Fig. 2 Intersection point between M1 and M2
1; 2; . . .; nÞ for the weight of the criteria and the linguistic

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 International Journal of Fuzzy Systems

xij Þ i = 1, 2, …, m; j = 1,2, …, n for alternatives

ratings ð~ 2003–2013. Since we find that the main solution to
with respect to criteria. As other fuzzy numbers in the evaluate financial index is to develop an evaluation
Fuzzy linguistic rating ð~ xij Þ the ranges of normalized tri- index framework, our study emphasizes on the design-
angular fuzzy numbers belong to [0,1]; so, there is not any ing financial performance evaluation system with rea-
requirement for a normalization procedure. sonable and objective factor weights. Specifying the
Step 2 Construct the weighted normalized Fuzzy decision rank of a factor would be a multiple criteria decision-
matrix. The weighted normalized value V~ is calculated by making problem, and the decision makers usually have
Eq. (15). more confidence giving linguistic variables rather than
Step 3 Determine values of positive ideal (A ) and negative expressing their judgments in the form of numerical
ideal (A ) solutions. The Fuzzy positive ideal solution figures. Thus, fuzzy set theory is a widely used tool to
(FPIS, A*) and the Fuzzy negative ideal solution (FNIS, deal with uncertain and imprecise dataset. Whereas,
A ) are shown in Eqs. (16) and (17): AHP, proposed by Satty [50], is a very useful decision-
 making method, being an extension of AHP, fuzzy AHP
A ¼
v~ 1 ; v~ 2 ; . . .; v~ n  is able to solve the hierarchical fuzzy decision-making
problems with better and more reliable results. The
¼ ðmax v~ij ji ¼ 1; 2; . . .; mÞ; j ¼ 1; 2; . . .; n ; ð16Þ
i
fuzzy AHP method has been widely used in different

A ¼
v~ ~
1 ;v ~
2 . . .; v n 
studies to solve various decision-making problems and it
is extensively reviewed in literature review section. The
¼ ðmin v~ ij ji ¼ 1; 2; . . .; mÞ; j ¼ 1; 2; . . .; n : ð17Þ past studies revealed the high applicability of fuzzy
i
MCDM models for solving practical decision-making
While using max and min operations does not give tri- problems for achieving better judgment on complicated
angular fuzzy number but it is possible to describe set of criteria and sub-criteria. Thus, fuzzy AHP as well
approximated values of min and max as triangular fuzzy as fuzzy TOPSIS are suitable techniques for determining
numbers, since we know that the elements v~ij 8i; j are nor- the financial index weights in our financial performance
malized positive triangular fuzzy numbers and their ranges evaluation system.
belong to the closed interval [0,1]. Thus, we can define the The main steps of performance evaluating in this
fuzzy positive ideal solution and the negative ideal as v~ j ¼ study are shown in Fig. 3. As indicated in Fig. 3, the
ð1; 1; 1Þ and v~j ¼ ð0; 0; 0Þ; j ¼ 1; 2; . . .; n. first step is determining the financial ratios to be used in
Step 4 Compute separation measures. The distance of each the decision-making process. Then, value of financial
alternative from A and A can be currently calculated ratios is determined for each firm. After constructing the
using Eqs. (18) and (19). evaluating criteria hierarchy model, the FAHP was used
Xn to obtain the fuzzy weights of the financial ratios. Then,
d ¼ vij ; v~ ij Þ; i ¼ 1; 2; . . .; m;
dð~ ð18Þ two MCDM analytical tools, FAHP and fuzzy TOPSIS
j¼1 are used to evaluate the performance of companies
X
n
d ¼ vij ; v~
dð~ ij Þ; i ¼ 1; 2; . . .; m: ð19Þ
j¼1

Step 5 Compute the closeness coefficient to ideal solu-

tion. This step solves the closeness coefficient to an ideal
solution by Eq. (20):
di
CCi ¼ : ð20Þ
di þ di
Step 6 Rank preference order. Select an alternative with
maximum CCi or rank alternatives based upon the CCi in
descending order [56].

5 Application

The aim of this study is to evaluate the performance of

7 Iranian petrochemical firms in the Tehran Stock
Exchange (TSE) based on their financial ratios during Fig. 3 Fuzzy AHP ranking

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M. Shaverdi et al.: Combining Fuzzy AHP and Fuzzy TOPSIS with Financial Ratios to Design a Novel Performance…

based on the weight of their financial ratios. Figures 3

and 4 indicate the fuzzy AHP and fuzzy TOPSIS steps.
Also, Fig. 4 shows the procedure of fuzzy TOPSIS
ranking.
Firstly, the hierarchy financial performance evaluation
model is designed by considering the past literature. The
proposed model is denoted in Fig. 5. The model is cate-
gorized into 5 main criteria, namely, liquidity ratios,
financial leverage ratios, activity ratios, profitability ratios,
and growth ratios. As indicated in Fig. 5, each criteria has
different sub-criteria.
Based on the opinion of decision makers from dif-
ferent areas, importance of ratios are calculated with
the help of questionnaires. FAHP is utilized for deter-
mining the weights of main and sub-criteria and it can
reduce the uncertainty and vagueness in the decision
process. Finally, Fuzzy TOPSIS method is suggested to
evaluate the performance of the petrochemical compa-
nies and do final ranking by considering financial ratios
and weights of the criteria. By this way, the ranking of
the firms according to their general performance is
obtained.
Fig. 4 Fuzzy TOPSIS ranking

C11: Current ratio (0.58429)

Liquidity Ratios (C1)
C12: Quick ratio (0.475239)

C21: Debt ratio (0.0798)

C22: Long term debt/ shareholder’s equity

Financial leverage Ratios (C2)

C23: EBIT/ Interest expense (0.6864)

C24: Long term debt/ Total asset (0.029)

Performance evaluaon

C31: Inventory turnover ratio (1.0899)

C32: Total asset turnover ratio (0.2026)

Activity Ratios (C3)
C33: Fixed asset turnover ratio (1.4145)

C34: Receivable accounting turnover ratio

C41: Net profit margin (0.1117)

Profitability Ratios (C4) C42: ROI (0.0841)

C43: ROE (0.6864)

C51: Asset Growth (3.4011)

C52: Operating profit Growth (1.7801)

Growth Ratios (C5)
C53: Sale Growth (1.1655)

C54: shareholder’s equity Growth (0.8085)

Fig. 5 Hierarchical structure of performance evaluating model

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 International Journal of Fuzzy Systems

Table 1 Fuzzy comparison matrix

C1 C2 C3 C4 C5 C6 C7 C8 C9

C1 1 1 1 1 3 9 1 1 9 1 2 9 1 4 9 1 5 9 1 6 9 1 5 9 1 5 9

C2 0.1 0.3 1 1 1 1 1 3 9 1 5 9 1 6 9 1 3 9 1 2 9 1 3 9 1 3 9

C3 0.1 1 1 0.1 0.3 1 1 1 1 1 4 9 1 4 9 1 6 9 1 3 9 1 6 9 1 6 9

C4 0.1 0.5 1 0.1 0.2 1 0.1 0.3 1 1 1 1 1 3 9 1 2 9 1 5 9 1 2 9 1 2 9

C5 0.1 0.3 1 0.1 0.2 1 0.1 0.3 1 0.1 0.3 1 1 1 1 1 3 9 1 4 9 1 2 9 1 2 9

C6 0.1 0.2 1 0.1 0.3 1 0.1 0.2 1 0.1 0.5 1 0.1 0.3 1 1 1 1 1 2 9 1 5 9 1 6 9

C7 0.1 0.2 1 0.1 0.5 1 0.1 0.3 1 0.1 0.2 1 0.1 0.3 1 0.1 0.5 1 1 1 1 1 4 9 1 2 9

C8 0.1 0.2 1 0.1 0.3 1 0.1 0.2 1 0.1 0.5 1 0.1 0.5 1 0.1 0.2 1 0.1 0.3 1 1 1 1 1 3 9

C9 0.1 0.2 1 0.1 0.3 1 0.1 0.2 1 0.1 0.5 1 0.1 0.5 1 0.1 0.2 1 0.1 0.5 1 0.1 0.3 1 1 1 1

C10 0.1 0.2 1 0.1 0.5 1 0.1 0.5 1 0.1 0.2 1 0.1 0.3 1 0.1 0.5 1 0.1 0.5 1 0.1 0.2 1 0.1 0.3 1

C11 0.1 0.3 1 0.1 0.2 1 0.1 0.5 1 0.1 0.3 1 0.1 0.2 1 0.1 0.3 1 0.1 0.2 1 0.1 0.5 1 0.1 0.2 1

C12 0.1 0.1 1 0.1 0.5 1 0.1 0.2 1 0.1 0.3 1 0.1 0.2 1 0.1 0.3 1 0.1 0.2 1 0.1 0.5 1 0.1 0.2 1

C13 0.1 0.2 1 0.1 0.5 1 0.1 0.5 1 0.1 0.2 1 0.1 0.3 1 0.1 0.2 1 0.1 0.5 1 0.1 0.3 1 0.1 0.2 1

C14 0.1 0.2 1 0.1 0.3 1 0.1 0.2 1 0.1 0.5 1 0.1 0.5 1 0.1 0.2 1 0.1 0.3 1 0.1 0.3 1 0.1 0.2 1

C15 0.1 0.2 1 0.1 0.5 1 0.1 0.3 1 0.1 0.2 1 0.1 0.3 1 0.1 0.5 1 0.1 0.2 1 0.1 0.3 1 0.1 0.2 1

C16 0.1 0.2 1 0.1 0.2 1 0.1 0.2 1 0.1 0.5 1 0.1 0.3 1 0.1 0.3 1 0.1 0.5 1 0.1 0.5 1 0.1 0.2 1

C17 0.1 0.5 1 0.1 0.5 1 0.1 0.3 1 0.1 0.5 1 0.1 0.5 1 0.1 0.2 1 0.1 0.3 1 0.1 0.2 1 0.1 0.5 1

To acquire the factor and sub-factor weights, a group of
decision makers, including academic and professional
experts, is formed. Questionnaires were provided to get
their viewpoints by using pair-wise comparisons, which
were derived from their assessments on the relative
importance of one factor over another, were used to form
the comparison matrices of each decision maker. Consider
a group of K decision makers involved in the research: they
make pair-wise comparisons of n elements. As a result of
the pair-wise comparisons, we get a set of K matrices,
aijk = {lijk, mijk, uijk} represents a relative importance of
element i to j, as assessed by the expert k. The triangular
fuzzy numbers in the group judgment matrix can be
obtained by using the following equation:
1X k
lij ¼ minfaijk g; mij ¼ bijk ; uij ¼ maxfdijk g:
k k k¼1 k
The representative comparison matrix of the group
acquired when making pair-wise comparisons of the factors
are shown in Tables 1 and 2.
After finding the weights of the criteria, we see that
receivable accounting turnover ratio has the highest weight.
Table 3 shows the weights of criteria from maximum to
minimum. Regarding to Table 3, receivable accounting
turnover ratio and debt/total asset has the maximum and
minimum weights, respectively.
By applying FAHP, the weights of sub-criteria of
financial ratios are determined for each company. Table 4
shows liquidity ratios for 7 companies, for both current
ratio and the quick ratio, Shiraz has the highest value while
for the current ratio, Abadan, and for quick ratio, Arak has
the minimum values.
Table 5 shows financial leverage ratios, including
debt ratio, long-term debt/stakeholder’s equity and
long-term debt/total asset for the companies. Regarding
to the results, Farabi and Isfahan has the highest values
in debt ratio and long-term debt/shareholder’s equity
ratio, respectively. For EBIT/Interest expense ratio and
long-term debt/total asset ratio, Shiraz has the highest
values.
Table 6 shows profitability ratios for the companies. Net
profit margin, ROI, and ROE are measured for evaluating
profitability. Shiraz, Farabi, and Abadan have the highest
values for net profit margin, ROI, and ROE, respectively.

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M. Shaverdi et al.: Combining Fuzzy AHP and Fuzzy TOPSIS with Financial Ratios to Design a Novel Performance…

Table 2 Fuzzy comparison matrix Table 2 continued

C10 C11 C14 C15

C1 1 6 9 1 3 9 C11 1 2 9 1 3 9
C2 1 2 9 1 6 9 C12 1 5 9 1 5 9
C3 1 2 9 1 2 9 C13 1 4 9 1 3 9
C4 1 5 9 1 3 9 C14 1 1 1 1 6 9
C5 1 4 9 1 5 9 C15 0.1 0.2 1 1 1 1
C6 1 2 9 1 3 9 C16 0.1 0.5 1 0.1 0.3 1
C7 1 2 9 1 6 9 C17 0.1 0.2 1 0.1 0.5 1
C8 1 5 9 1 2 9 C16 C17
C9 1 4 9 1 5 9
C10 1 1 1 1 4 9 C1 1 5 9 1 2 9
C11 0.1 0.3 1 1 1 1 C2 1 3 9 1 5 9
C12 0.1 0.5 1 0.1 0.3 1 C3 1 6 9 1 4 9
C13 0.1 0.5 1 0.1 1 1 C4 1 2 9 1 2 9
C14 0.1 0.5 1 0.1 0.5 1 C5 1 3 9 1 2 9
C15 0.1 0.5 1 0.1 0.3 1 C6 1 4 9 1 5 9
C16 0.1 0.3 1 0.1 0.3 1 C7 1 2 9 1 4 9
C17 0.1 0.3 1 0.1 0.2 1 C8 1 2 9 1 6 9
C9 1 5 9 1 2 9
C12 C13
C10 1 4 9 1 3 9
C1 1 7 9 1 6 9 C11 1 3 9 1 5 9
C2 1 2 9 1 2 9 C12 1 5 9 1 5 9
C3 1 5 9 1 2 9 C13 1 4 9 1 3 9
C4 1 4 9 1 5 9 C14 1 2 9 1 6 9
C5 1 5 9 1 3 9 C15 1 3 9 1 2 9
C6 1 3 9 1 6 9 C16 1 1 1 1 3 9
C7 1 6 9 1 2 9 C17 0.1 0.3 1 1 1 1
C8 1 2 9 1 3 9
C9 1 6 9 1 6 9
C10 1 2 9 1 2 9
C11 1 3 9 1 1 9
C12 1 1 1 1 3 9
C13 0.1 0.3 1 1 1 1 Table 7 shows growth ratios for petrochemical compa-
C14 0.1 0.2 1 0.1 0.3 1 nies. As calculated in Table 7, for sales growth and oper-
C15 0.1 0.2 1 0.1 0.3 1 ating profit growth, Shiraz has the highest values.
C16 0.1 0.2 1 0.1 0.3 1 Moreover, for asset growth and shareholder’s equity
C17 0.1 0.2 1 0.1 0.3 1 growth Isfahan and Farabi have the highest values,
respectively.
C14 C15 Table 8 indicates activity ratios for the petrochemical
C1 1 5 9 1 6 9 companies. For inventory turnover ratio, Arak has the
C2 1 3 9 1 2 9 highest value, for total asset turnover ratio, Farabi has the
C3 1 6 9 1 3 9 highest value, for fixed asset turnover ratio, Arak has the
C4 1 2 9 1 5 9 highest value, and for the receivable accounting turnover
C5 1 2 9 1 4 9 ratio, Shiraz has the highest value.
C6 1 5 9 1 2 9 After ranking and applying fuzzy AHP, the final results
C7 1 4 9 1 5 9 in Table 9 shows that Arak petrochemical company has the
C8 1 3 9 1 3 9
highest weight with 0.144851 and also has the best finan-
C9 1 6 9 1 6 9
cial performance, whereas Shiraz petrochemical company
has the minimum value and also the lowest financial
C10 1 2 9 1 2 9
performance.

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 International Journal of Fuzzy Systems

Table 3 Financial ratios ranking by FAHP 6 Results and Analysis

FAHP output for criteria
In the proposed method, FAHP was used as a tool for
Receivable accounting turnover ratio 3.570038264 determining weights of financial ratios and fuzzy TOPSIS
Asset growth 3.401088484 was used to determine the rank of petrochemical compa-
Operating profit growth 1.780102706 nies. Arak petrochemical industry was chosen as the best
Fixed asset turnover ratio 1.41450564 company and it had the best financial performance mea-
Sale growth 1.165505663 sures. The contributions of this paper are as follows:
Inventory turnover ratio 1.089920915
1. The proposed model presented a mixed multi-criteria
Shareholder’s equity growth 0.808473229
decision-making models that applied simultaneously,
EBIT/interest expense 0.686381098
two techniques to compare the result and ranking of
ROE 0.686381098
companies to have a better and more precise judgment
Current ratio 0.584290222
on each company’s performance.
Quick ratio 0.475238688
2. The proposed performance evaluation model is based
Total asset turnover ratio 0.202565038
on financial index. As many past studies pointed,
Net profit margin 0.111688857
overwhelming majority of evaluation models were
Long-term debt/shareholder’s equity 0.084081716
based on other indexes not just financial criteria.
ROI 0.084081716
3. While the past literature review shows that some
Debt ratio 0.0798 performance evaluation models have been based on
Long-term debt/total asset 0.029027422 financial ratio but they were not complete. The current

Table 4 Liquidity ratios of companies

Arak Fanavaran Khark Abadan Isfahan Farabi Shiraz

Current ratio 0.711618572 0.96915229 2.720482592 0.611797737 1.308979028 0.949359287 4.701829292

Quick ratio 0.38753971 0.822823112 2.296970269 0.482338372 0.867329295 0.641973901 3.714210526

Table 5 Financial leverage ratios

Arak Fanavaran Khark Abadan Isfahan Farabi Shiraz

Debt ratio 0.638424 0.588587 0.320089 0.637287 0.679485 0.878689 0.340159

Long-term debt/ 0.118762376 0.373948055 0.074684578 0.280808938 0.663256587 0.137928416 0.333300168
shareholder’s
equity
EBIT/interest 19.28106956 14.09046777 6863.423009 23.13208795 43.53430738 -0.387975519 1732.600583
expense
Long-term debt/total 0.042941679 0.153847149 0.050778845 0.101853061 0.21258359 0.016732277 0.219924228
asset

Table 6 Profitability ratios

Arak Fanavaran Khark Abadan Isfahan Farabi Shiraz

Net profit margin 0.096867 0.638424 0.588587 0.320089 0.637287 0.679485 0.878689
ROI 0.085491 0.118762376 0.373948055 0.074684578 0.280808938 0.663256587 0.137928416
ROE 0.236439 19.28106956 14.09046777 68.423009 23.13208795 43.53430738 -0.387975519

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M. Shaverdi et al.: Combining Fuzzy AHP and Fuzzy TOPSIS with Financial Ratios to Design a Novel Performance…

Table 7 Growth ratios

Arak Fanavaran Khark Abadan Isfahan Farabi Shiraz

Sales growth 37.55959556 5.445713141 8.006127826 10.80260023 -8.396712952 -18.12822041 98.42234592

Asset growth 14.1056342 6.40143666 10.217908 28.3204579 40.4123215 19.5786119 20.354391
Shareholder’s -2.382609776 -15.01243224 3.228111317 -1.874075697 -9.631401703 -57.51951655 23.32780635
equity
growth
Operating -39.70698271 -38.70656639 -1.080534308 -23.87572287 -63.86339807 -115.4126585 1664.690047
profit growth

Table 8 Activity ratios

Arak Fanavaran Khark Abadan Isfahan Farabi Shiraz

Inventory turnover ratio 4.236905694 4.059101859 1.132567041 8.762013445 2.726269316 7.473338554 1.829235365
Total Asset turnover ratio 0.882559863 0.519611007 0.676670331 0.763193886 0.642971931 1.847232373 0.429277108
Fixed Asset turnover ratio 2.005236527 0.927536502 2.543624013 1.285087973 1.765918351 10.82907598 1.057694857
Receivable accounting turnover 6.716224345 1.804131315 7.899930242 17.46194469 5.394377196 6.282608015 26.79439916
ratio

Table 9 Final weights of Companies Final weights financial performance measures, further researches can
companies based on Fuzzy consider both quantitative and qualitative financial per-
TOPSIS Arak 0.144851 formance index. For future studies, researcher can work on
Fanavaran 0.144232 other useful mathematical-based decision-making models
Khark 0.143018 such as PROMETHE and VIKOR, which can be applied
Abadan 0.144507 with these proposed methods to prepare a precise result.
Isfahan 0.142228 Another suggestion is to combine balanced scorecard
Farabi 0.142009 (BSC) approach with MCDM models for designing a more
Shiraz 0.139155 comprehensive evaluation model as BSC combines cus-
tomer index, process index, learning index as well as
financial index. The next proposed future study can be
suggested model tries to identify new financial ratios using DEA model based on current financial framework
and present a more comprehensive evaluation model. approach. In future researches, the proposed model can be
applied to other industries.

7 Conclusion

In current global economy, one of the most important References

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only the traditional financial ratios have been used. Thus,
our proposed model is different from other studies because
it uses not only the traditional financial measures but also
the modern financial measures together in a MCDM
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Meysam Shaverdi is a graduate student in finance at the Edwards
School of Business, University of Saskatchewan, Canada. He received
bachelor and master degrees in industrial management at IKIU and
the University of Guilan, respectively. His research interests are
applications of OR models in finance, fuzzy multi-criteria decision
making (MCDM), sustainable and green supply chain management
(SCM), and operations/finance interface. He has published some
papers and book chapters in international journals and publishers in
the aforementioned areas.
Iman Ramezani holds a master degree in Socio-economic systems
engineering from Sharif University of Technology and a bachelor’s in
industrial engineering from Hormozgan University in Iran. He has
some publications in fuzzy multi-criteria decision making (MCDM),
sustainable SCM, multi-objective and simulation-based optimization,
stochastic optimization, applied statistics, big-data as well as appli-
cations of OR in finance.
Reza Tahmasebi is assistant professor of organization theory and
organizational behavior at University of Tehran, Farabi Campus. He
obtained his master degree in human resource management and PhD
in organizational behavior, both from The University of Tehran. His
research focused on performance management and talent manage-
ment. He has published several articles in the area of organizational
performance and human resource management. He is also working as
human resource management consultant in many organizations.
Ali Asghar Anvary Rostamy obtained his bachelor and MBA from
The University of Tehran and PhD in Multiple Criteria Financial and
Investment Decisions field from the Osaka University. He worked as
full professor from September 2011 at Tarbiat Modares University
(TMU). His research interest is on financial and investment decision
making, organizational performance evaluation and management, and
business decision making. He has extensively published more than
110 full papers at national and international high-ranked refereed
journals and conferences.
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