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