Factor analysis to evaluate the financial performance of the construction industry in an emerging market: the case of Colombia

Abstract

Factor analysis is a method used to reduce several variables into fewer dimensions called factors. This study conducts factor analysis on the financial ratios of the construction companies in Colombia in the period 2000--2014. According to that, the purpose of the study is to use the factorial analysis technique to determine whether the financial ratios are related to a smaller number of unobservable factors and eliminate redundancy among them. The results show that it is possible to explain 88.753% of the variance with 13 financial ratios grouped into three factorsEl análisis factorial es un método usado para reducir varias variables en una menor cantidad de dimensiones llamadas factores. Este trabajo realiza un análisis factorial sobre las ratios financieras de las compañías constructoras en Colombia en el período 2000-2014. En base a lo anterior, el propósito del trabajo es usar la técnica de análisis factorial para determinar si las ratios financieras están relacionadas con un menor número de factores no observables y eliminar redundancia entre ellos. Los resultados muestran que es posible explicar el 88,753% de la varianza con 13 ratios financieras agrupadas en tres factores