Certainly! It's great that you're taking a systematic approach to reduce the number of financial ratios for your analysis. Here's a step-by-step guide on how you can perform the intercorrelation matrix analysis using SPSS:

Steps:

1. Data Preparation in Excel:

· Create an Excel spreadsheet with 20 financial ratios as columns and 250 data points (10 firms x 5 years).

· Each row should represent a specific financial ratio for a specific firm in a specific year.

2. Import Data into SPSS:

· Open SPSS (Version 29 in your case).

· Go to File > Open > Data and select your Excel file.

· Ensure that your data is imported correctly, with each financial ratio in a separate column.

3. Correlation Matrix Analysis:

· Go to Analyse > Correlate > Bivariate.

· Select all the financial ratios and move them to the "Variables" box.

· Check the box for "Pearson" correlation coefficient.

· Click "OK" to generate the correlation matrix.

4. Interpret Correlation Matrix:

· Examine the correlation matrix to identify pairs of financial ratios with weak correlations (≤ ± .5).

· Weakly correlated ratios may be candidates for elimination in subsequent steps.

5. Repeat for Each Firm:

· If you are interested in understanding the correlation pattern for each firm separately, you can repeat the above steps for each individual firm. This would result in five correlation matrices (one for each firm).

6. Consolidate Results:

· If you choose to analyze each firm separately, you can summarize the findings by noting which ratios consistently show weak correlations across multiple firms.

7. Further Analysis:

· Consider additional statistical techniques or visualizations to gain deeper insights, such as factor analysis or clustering.

Regarding Your Questions:

• It is not necessary to create a separate correlation matrix for each firm. You can create one matrix with all the data points and analyze the overall intercorrelations.
• Your approach of creating a single Excel table with 20 variables and 250 rows is appropriate. This format is commonly used for correlation analysis in SPSS.
• Consider exploring additional techniques like factor analysis or clustering for a more comprehensive understanding of the relationships between financial ratios.

Remember, the goal is to systematically identify and retain financial ratios that provide meaningful information about profitability in the technology sector. Adjust your approach based on the insights you gain from the correlation analysis. Good luck with your analysis!

Dear Carlos Moreno Bonilla

This combination of data is called panel data

It is recommended to use the E-views program for analysis because it is the most appropriate and specialized program for studying this type of data

Not SPSS

Therefore, it is normal to face difficulty in the process of planning and defining data entry by SPSS. because it is not the best choice.

Dear Azgar Alam

These steps that you mentioned are a ready-made template that does not fit the question asked, nor does it fit the panel data type

Please keep this in mind because it is a common statistical error that leads to completely unreliable results.

Thank You.

Thank you very much Azgar Alam for your detailed step-by-step procedure to use SPSS in this situation. It is a tremendous value-adding reference.

I agree with you about using additional statistics tools such as factor analysis - probably twice if needed - and cluster analysis. It will depend mainly on the reduced number of FRs obtained from this intercorrelation matrix analysis.

However, I would need to be more precise in my research because my original question was focused on using SPSS to resolve the intercorrelation matrix analysis related to FRs of the "profitability" area. Indeed, The research involves additional FRs from other financial performance areas, including liquidity and solvency, leverage, valuation, efficiency, and growth ratios. The first selection I made from 98 financial ratios specified by 32 sources resulted in 38 FRs distributed in these six areas.

Profitability was the area with the remaining most significant number of FRs (20). That's why I focused on it! By the way, one of the assumptions of the analysis is that "each area should be represented by a minimum of two FRs that best represent the specific area."

Therefore, the results of the intercorrelation matrix will indicate whether to continue with factor analysis and cluster analysis.

The study also involves the selection of FRs that best represent the financial decisions in investment, financing, and dividend distribution. Therefore, it is a more straightforward analysis and not included in my question.

Thank you very much, Imad-Addin Almasri for your input. I downloaded the student version of EViews. Is there any link with a step-by-step procedure to perform a matrix correlation analysis with it? By the way, could you please give more details about the limitations of SPSS in conducting this analysis? I greatly appreciate further information.

Finally, I sincerely appreciate your valuable time and effort in giving light to my questions. I am impressed with the usefulness of this resource forum because it is the first time I am using it, and I got excellent support!

Thank you again!