Why should companies use historical trend analysis and industry benchmarking?
Over the past year, businesses have routinely asked how everyone else is faring through the economic turmoil. Their questions can be quantitatively addressed using historical trend analysis and industry benchmarking. Historical trend analysis provides the financial story of a business in recent years and assists in monitoring the impact of key decisions. Benchmarking is the process of comparing business performance metrics against other businesses operating within a similar industry, provides a snapshot of the performance of your business and aids in assessing yourself against the competition. Benchmarking within a specific industry often tells a unique story. For example, over the past year, a business maintained consistent sales but the gross profit percentage eroded. The management team thought they were operating above average based on what they had routinely witnessed on the news. To their surprise, the industry benchmarking indicated that, on average, sales within their industry
