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BENCHMARKING (BENEFITS (Gain an independent perspective about how well you…
BENCHMARKING
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WHEN EVALUATING ANY INDUSTRY DATA, IT SHOULD BE ASSESSED
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USAGE
When we use benchmarks, the main question we are trying to answer is, "what is the average level of performance for a given ratio/metric in a specific industry?" In a way, a benchmark is a scorecard, against which we can assess the relative strength of a company.
EXAMPLE (BENCHMARKING)
For example, credit analysts at banks use industry benchmark data as a way to assess the relative health of a given company. Valuation analysts use benchmark data to assess the future earning potential of a company. Accountants use benchmark data as a way to identify any weak areas that need to be improved by their clients.
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