To assess how good your performance has been or whether something unusual has happened, you need a benchmark for comparison. Perhaps the most common comparison is to your own performance in prior periods. This enables you to see how things have changed over time and helps identify trends or unusual outcomes. For example, much of what appears in the Management Discussion and Analysis (MD&A) section of annual reports compares selected items in the current year's financial statements to the corresponding item from the previous year and discusses why the numbers are different. Comparing your performance to the prior period is also how growth is calculated...
- from Financial Literacy for Managers: Finance and Accounting for Better Decision-Making
- Publisher: Wharton Digital Press
- Released: May 2012
Become familiar with common benchmarks used to measure financial performance, and learn how they can help you evaluate the past and plan for the future.
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