Question

Benchmarking refers to

a. comparing a firm's ratios to a meaningful standard
b. claiming a geographic area (state, region, etc) for doing business
c. influencing the prices charged by suppliers, or setting prices charged to customers
d. reducing price until dollar volume increases

Answer 1

A

Step-by-step explanation:

Benchmarking is the process of comparing a firm's ratio to a meaningful standard. the standard could be industry average, comparable firms ratios or the standardized ratio

Benchmarking can be used to know the performance of a company when compared to other firms

it can also be used to determine if a stock's value is overvalued or undervalued.

For example, if the price of a stock when calculated with CAPM is $14 and the stock is selling for $20. We can determine that the stock is overvalued. this can help the firm or investors determine the appropriate action

for example, an investor can decide to sell the overvalued stock