Final answer:
There is no definitive answer to whether it's best to compare this year's performance with last year's actual performance or this year's budget; both comparisons are valuable and serve different purposes in financial analysis and planning.
Step-by-step explanation:
The question of whether it is best to compare this year's performance with last year's actual performance rather than this year's budget is subjective and cannot be answered with a definitive true or false.
Comparing this year's performance with last year's actual figures provides a historical perspective and can identify trends, whereas comparing it to this year's budget examines adherence to financial planning and may indicate variances that need to be addressed.
It's essential to evaluate both comparisons to gain a comprehensive understanding of a business's financial health and performance. Just as it is unnecessary to calculate expenses down to the penny, there's a recognition that precision in budgeting and comparison should fit the context and purpose.
Moreover, being proactive about understanding and discussing financial performance during an evaluation can lead to more effective goal-setting for the upcoming year.