This metric tells you about the relative size of a company compared to yours. It is one of the first metrics to consider when financial benchmarking for growth.
The 5-year CAGR reveals the direction a company is going. If this number is not provided, it can be deduced from the net sales over multiple years. Even if a company’s net sales are higher than yours, if that number is declining yearling, there is market share to be gained.
If you want to measure operational performance, look at operational profitability. Note that exceptional costs and profits won’t be included in this number.
Cost of goods sold (COGS)
This is a crucial factor in determining profit drivers. As inflation continues to grow, COGS will become increasingly important to tell you whether a company is paying more than you for its inputs.
Total operating expenses (Opex)
Personnel and other operating costs will give you a fuller picture of what drives a company’s profit, and it can also provide a benchmark for total operating expenses. If you suspect your company is less profitable than a peer, this split can offer a reason for the lower efficiency.
Capital expenditures (CAPEX)
Looking at net investments in tangible fixed assets of industry peers can tell you if your industry is expanding its asset base or decreasing it. This can show what the future plans of your competitor might be, or what they expect from industry trends. If margins are under pressure, but the industry is expanding, that could signal trouble. The earlier you recognize this, the more power you have.
Net debt / EBITDA
One of the best markers of a company’s financial future is its ability to pay off debt.
Is a company’s financial health solid? Are they set up for long-term success? This metric tells you pertinent information about a competitor.
Return on Capital Employed (ROCE)
Here you can compare the EBIT margin with the required operational capital, like fixed assets and working capital.