You are the CEO of Company A and you are using an industry leader(Leader Company)for benchmarking.Company A is much smaller than Company B in terms of total assets and total sales revenue.We should compare the:
A)gross profit of Company A to the gross profit of Leader Company
B)net income of Company A to the net income of Leader Company
C)net sales of Company A to the net sales of Leader Company
D)net income to net sales ratio of Company A to net income to net sales ratio of Leader Company

Question

Quizplus · Accepted Answer

Comparing the net income to net sales ratio of Company A to the net income to net sales ratio of Leader Company is the best choice. This ratio takes into account both profitability and efficiency, which are important factors to consider when comparing companies. Comparing gross profit or net sales alone may not provide an accurate picture of how efficiently the companies are operating, while comparing net income alone may not account for differences in sales volume. The net income to net sales ratio considers both factors, making it the best choice for benchmarking.

You Are the CEO of Company a and You Are