Financial Performance Measurement of Logistics Companies: Empirical Evidence from Saudi Arabia

This study aims to identify the best performance measures affecting the financial performance of logistics companies listed on the Saudi Stock Exchange over the period 2018–2021. The financial performance of Saudi logistics companies is analyzed using Shannon’s entropy method, a widely used multi-criteria decision-making (MCDM) method. We apply the entropy method to compute the weights of decision criteria (financial ratios) in order to identify the best performance criteria affecting the financial performance of Saudi logistics companies. The financial ratios used are classified into four main categories based on the type of information they measure: liquidity ratios, solvency ratios, efficiency ratios, and profitability ratios. Our results show that profitability ratios are the best performance indicators affecting the financial performance of Saudi logistics companies over the period 2018–2021 followed by liquidity ratios and solvency ratios, respectively. The results also indicate that efficiency ratios are the performance indicators that have the least effect on the financial performance of Saudi logistics companies over the period 2018–2021. We believe that this study will be useful to the managers of logistics companies. It provides them with a useful scientific methodology to evaluate and analyze the performance of their companies from a financial perspective.