how does a company's financial statement acts as a benchmark?

Question

either financial statement, income statement, balance sheet or anything that is in the same category.

thanx!
and is balance sheet, trading and profit & loss account under financial statement?

Answer 1

Financial statements (fs) can act as internal or external benchmarks. Internally, you use financial statements as benchmarks of success. You can use your own fs for last yr and aim for a 15% growth rate, for e.g. Or you can look at the fs of all the companies in the same industry as yourself and see what margins they're making and compare yourself to them. Managers often use a competitor’s financial statements to benchmark profit performance, cost structures, financial health, capabilities, and strategies. Others use yours to assess the risk of doing business with you.