Company Finance: 15.12 Financial Benchmarks

The financial benchmarks presented in Section 15.11 Sectoral Differences were obtained from the accounts of companies filed at Companies House or at the equivalent registries in Scotland and Northern Ireland.

While HSBC Bank is unable to vouch for the accuracy of the raw accounting information, their economists are entirely responsible for the analysis which was undertaken on that data.

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Benchmark values

Benchmark values were calculated for important financial and operating ratios based on a ranked distribution of results.

This allowed the identification of quartile and median values, and the identification of the proportion of companies meeting particular criteria, such as the percentage making a pre-tax loss.

Basis of samples

The section presents analyses of random samples of small, medium and large companies.

In each case, the size of the sample was around 3,000 businesses. The selections were based on the number of employees as reported in accounts for years ending between 1 April 2003 and 31 March 2004.

Qualifications to the analysis

There are a number of qualifications to this analysis.

  • The first is that the financial benchmarks may not be representative of the performance of very small companies, as many of these do not file full accounts.
  • The second is that the data do not allow meaningful results for the current financial year. Private companies are allowed up to ten months from their annual reporting date to file their accounts.
    It may then take a further month or two for these to be made available, via data research companies, to analysts. It follows that any meaningful analysis must take place on relatively old data.
  • Finally, it is not possible to apply this type of benchmarking for sectors where the bulk of enterprises are partnerships rather than companies, sectors such as legal services, health care, and accountants.