Measuring the Financial Performance of the Dairy Industry by Applying Discriminant Function Analysis

By : P. Sarveswara Rao, N. Madhava Rao

Page No: 292-312

Abstract
Seven dairy units, spread over the erstwhile Andhra Pradesh were studied for a period of 7 years, using Discriminant Analysis. The study is divided into two sections; the first section deals with the identification of a set of variables to construct a model for evaluating the performance of the dairy units; the second section is concerned with developing the discriminant function to predict the nature of the performance.
Z= -22.009 – 3.21*CR + 6.92*LR + 12.71*STCR + 0.21*SWCR + 28.32*BFWC + 32.56*PR + 1.99*DER +1.19 * GPR – 0.318 *NPR+ 2.968 * ICR — (6.1)
We evaluated the function given in (6.1) for each unit by substituting the values of the 10 FRs mentioned in the function, which gave us the Z-Scores for each unit. If the score was equal to or more than the cutoff value, the unit was classified as good; otherwise it was classified as poor. We concluded that three dairies are good performers, and the remaining four dairies are poor performers.

Authors :
P. Sarveswara Rao
Assistant Professor of Commerce, SR & BGNR Government Arts & Science College, Khammam, Telangana.

N. Madhava Rao
Assistant Professor of Commerce, Government Degree College, Nelakondapalli, Khammam, Telangana.
 

DOI: https://doi.org/10.32381/PROD.2021.62.03.8