Business performance is all relative. Whether you're measuring the success of your business or one that you're investing in, it's essential to compare it to the rest of the industry. Industry ratios allow you to benchmark the performance of a business against others. But to do this you'll need to know where to find the industry data.
Finding Industry Ratios
Yahoo Finance (biz.yahoo.com) provides a number of key industry financial ratios, such as the price/earnings ratio, long-term debt-to-equity and return-on-equity. This information is listed for dozens of industries as diverse as regional airlines, book publishing and restaurants. The website BizStats (bizstats.com) also offers ratios for a range of industries. Simply browse the available industries and select the ratio you need, such as return on sales, return on assets and inventory turnover. Another option is Bloomberg Businessweek's Company Insight Center (investing.businessweek.com). To use this service, search for a publicly traded company in the "company lookup" box and click the correct company from the results. Then click the "financials" tab and the "ratios" tab to get financial ratios for the company compared to the industry.
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