Milestone map
Milestone map
3 milestones
Select a Peer Group and Collect Financial Ratio Data
2–3 weeks
Select a publicly listed company and construct a peer group of five to eight genuine competitors or comparables. For each company in the peer group (including the subject company), collect the five most critical financial ratios for the industry from the most recent annual filings: the specific ratios must be chosen for the industry context — technology companies need different ratios than retailers or manufacturers.
Proof required
Submit: (a) the subject company, peer group members (five to eight), and rationale for peer inclusion (size, geography, business model), (b) a data table showing the five chosen financial ratios for all companies with the sources for each value (annual filing, not data aggregators), and (c) rationale for the five ratios chosen — explaining why these are the most meaningful ratios for this industry.
What gets checked
- Peer group rationale addresses comparability — same business model, geography, and scale tier
- Ratio data is from annual filings — not from financial data aggregators that may apply adjustment methodologies
- Ratio choice is justified for the specific industry — not a generic set applied to any industry
Common mistakes
- Including companies in the peer group that operate different business models — a cloud SaaS company is not a valid peer for a traditional software licensing company even if they have similar revenue
- Using pre-computed ratios from a data site rather than calculating from actual filings
Resources
What a verifier looks for
- Challenge the peer group composition: 'You included Company X in the peer group — but their business model is primarily hardware, while the subject company is primarily services. How does that affect the comparability of margin ratios?'
Produce the Benchmarking Analysis with Trend and Peer Comparison
2–3 weeks
Conduct a two-dimensional benchmarking analysis: cross-sectional (how the subject company compares to peers on each ratio) and time-series (how the subject company's ratios have trended over three years). Identify where the subject company leads, lags, or is in line with peers. Diagnose the most significant outliers.
Proof required
Submit a financial ratio benchmarking analysis (minimum 1,500 words) covering: (a) a cross-sectional comparison table showing subject company vs. peer group median, 25th percentile, and 75th percentile for each ratio, (b) a three-year time-series chart or table for the subject company's ratios, (c) identification of the two most significant outliers (where the company leads or lags significantly) with a diagnosis of the likely cause.
What gets checked
- Cross-sectional comparison uses quartile ranges — not just peer average
- Time-series covers three full fiscal years
- Outlier diagnosis goes beyond description — what explains the gap?
Common mistakes
- Comparing against peer average only — outliers hide in averages; quartile ranges are required
- Outlier description without diagnosis — 'the company has a lower gross margin than peers' is an observation, not an analysis
What a verifier looks for
- Challenge the outlier diagnosis: 'You identified gross margin as significantly below peers and attributed it to pricing strategy — but what evidence do you have that pricing is the cause rather than product mix or cost structure?'
Present Benchmarking Findings to a Finance or Equity Research Professional
1 week
Present the benchmarking analysis to a finance professional (equity analyst, investment manager, CFO, or finance academic) who will challenge at least two of your peer group choices or ratio interpretations.
Proof required
Submit: (a) a one-page summary of the most significant benchmarking findings with investment or management implications, (b) Q&A log from the review session (minimum 250 words), and (c) attendance record with reviewer name and credentials.
What gets checked
- One-page summary draws implications — not just lists findings
- Q&A log shows challenges to methodology or ratio interpretation
- Reviewer has finance or equity analysis expertise
Common mistakes
- Summary reports all findings without prioritisation
- Review with someone who cannot challenge financial analysis methodology
What a verifier looks for
- Challenge the ratio methodology: 'You used reported EBITDA for the margin comparison — but two of your peers have significant restructuring charges that are excluded from reported EBITDA. How does including or excluding those charges change your ranking?'
- Provide written confirmation (minimum 150 words) of your finance credentials and challenges raised.