Chapter: 9 Fundamentals of Financial Analysis

Section: 5 Industry Comparability Analysis

Our analyses and comparisons up to this point were based on the individual company and past performance of the same firm. In industry analysis, the firms’ performance is compared with the industry averages. This helps the managers to gauge the efficiency and effectiveness of their business. Moreover, the relative position of the firm in terms of performance and financial position is apparent from this comparison. Further, this comparison helps to develop strategic plans. 


Industry statistics are available with Industry Associations, Industry Surveys, and Data Banks etc. In addition, annual reports and industry publications carry useful industry statistics.