Question

Which of the following is correct regarding the process of benchmarking? It occurs when a company...

Which of the following is correct regarding the process of benchmarking?

  1. It occurs when a company increases the price of its products and reduces operating expenses.
  2. It enhances financial analysis by comparing a company’s financial ratios with those of competing companies in the same industry.
  3. It creates substantial sales growth for most companies.
  4. It is also called trend analysis.

Homework Answers

Answer #1

The correct choice is - It enhances financial analysis by comparing a company’s financial ratios with those of competing companies in the same industry.

During the benchmarking process, any business can compare itself against a standard and develop a consistent way of measuring performance. For this purpose, it will analyze in common areas that we may want to target for benchmarking like performance, and profitability, etc. by financial ratios.

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