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Benchmarking and Financial Performance

Is benchmarking a valid and effective means of measuring a company's financial performance?

Please explain in detail and provide at least 4 references to support.

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Benchmarking is a valid and effective means of measuring a company's financial performance, but it should not be used as the only means to measure performance. When combined with other analyses, benchmarking serves a viable purpose and is an integral part of a comprehensive financial performance analysis. When management uses benchmarking, they perform a very detailed analysis of the company's financial data and compare the data with the company's main competitors. This is a very time and resource intensive process because the company is comparing each item, line by line. This allows management to determine how much is spent in advertising as compared to how much the competitors are spending in advertising, or how much the company is investing in the training and development of employees, compared to the amount that is being invested in the same area by the competitors. By using this type of analysis, management ...

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Is benchmarking a valid and effective means of measuring a company's financial performance?

Please explain in detail and provide at least 4 references to support.

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