Peer group analysis can be performed by
A) management choosing a set of companies that are similar in size or sales, or who compete in the same market.
B) using the average ratios of this peer group, which would then be used as the benchmark.
C) identifying companies in the same industry that are grouped by size, sales, and product lines in order to establish benchmark ratios.
D) Only a and b relate to peer group analysis.

Question

Quizplus · Accepted Answer

Peer group analysis can be performed by management selecting a group of similar companies (A) and using their average ratios as a benchmark (B). Therefore, options A and B are correct, making D the correct answer. Option C is also a valid way to group companies, but it is not the only way, and it is not necessary for performing peer group analysis.

Peer Group Analysis Can Be Performed by