New Financial Ratios Based on the Compositional Data Methodology

Due to their type of mathematical construction, the use standard financial ratios in studies analysing health a group firms leads series statistical problems that can invalidate results obtained. These are originated by asymmetry ratios. The present article justifies new methodology using compositional data (CoDa) analyse statements sector, improving analyses conventional since enables techniques be applied without encountering any serious drawbacks such as skewness and outliers, depending on arbitrary choice which accounting figures is numerator ratio denominator. An example with wine sector provided. show when CoDa, outliers much reduced invariant denominator permutation.