Benchmarking: what is the gap between our performance and that of the leader in our industry? And how do we close that gap?

My definition of benchmarking is: making meaningful comparisons to others, and identifying opportunities to improve.

So where do you even start if you want to do some financial benchmarking?
My advice: the income statement. Here are the numbers for Apple in FY22. Start off with these two lines: gross margin and operating margin. As a very simple example of vertical analysis, calculate gross margin and operating margin as a percentage of revenue. Now that gross margin percentage sounds lower than I expected, and the operating margin higher than expected. Next step: finding out what drives these! Off you go.

Philip de Vroe (The Finance Storyteller) aims to make accounting, finance and investing enjoyable and easier to understand. Learn the business and accounting vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better investing decisions. Philip delivers #financetraining in various formats: YouTube videos, livestreams, classroom sessions, and webinars. Connect with me through Linked In!

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