Benchmarking and Ranking of Quoted Manufacturing Companies in Nigeria: A Data Envelopment Analysis Approach

Ifuero Osad Osamwonyi and Kennedy Imafidon

International Journal of Financial Research, 2015, vol. 6, issue 4, 90-98

Abstract: The objective of this study is to identify quoted manufacturing companies in Nigeria that can be used as benchmark for less efficient companies. To achieve this objective, the study adopted the output orientated DEA model with total asset, shareholder¡¯s equity, cost of goods sold and operating expenses as input variables, while the output variables are sales/turnover, net profit, return on asset, and return on equity. The output orientated DEAP Version 2.1 package with variable return to scale assumption [multi-stage DEA approach] was employed. The analysis revealed the inefficient quoted manufacturing companies that should emulate the efficient ones in terms of input-output mix. The result indicates that twenty-seven companies can be used for benchmarking. The study recommends possible merger of the inefficient companies with efficient ones in the same sector in order to strengthen them and enhance their contributions to development of Nigeria.

Keywords: benchmarking; manufacturing; Data Envelopment Analysis (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:6:y:2015:i:4:p:90-98

DOI: 10.5430/ijfr.v6n4p90

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