Dynamic Quantile Positioning: A Visual Approach to Financial Ratio Benchmarking Against Industry Peers
Dynamic Quantile Positioning: A Visual Approach to Financial Ratio Benchmarking Against Industry Peers

Summary/Abstract: Purpose: This paper introduces an innovative visualization method for financial ratio benchmarking that enables comprehensive evaluation of a company’s financial performance relative to industry peers, addressing the challenge of information overload in financial analysis.Design/methodology/approach: The method analyses data from nearly 200,000 Polish companies classified by PKD codes (aligned with NACE Rev. 2). It evaluates 14 financial ratios across five categories: sales characteristics, profitability, financial leverage, liquidity, and working capital. Each ratio is mapped against industry distributions divided into five quantiles ranging from ‘far below average’ to ‘far above average’. The visualization displays current and previous year positions using a graphical table format with ‘X’ marks and gray rectangles to track changes over time. A survey of 27 users assessed the method’s effectiveness.Findings: The visualization successfully provides an immediate, intuitive understanding of a company’s relative financial position within its sector. Survey results showed 58% of respondents found the method understandable/clear, while 56% believed the quantile-based approach superior to traditional sector averages/medians. The method effectively reveals financial dynamics, as demonstrated through the Jeronimo Martins Dystrybucja S.A. case study.Research limitations/implications: Limitations include reliance on self-reported financial statements, absence of cash flow data, challenges when companies operate across multiple sectors, and potential quantile conflation when over 20% of observations have identical values.Originality/value: This visualization technique in financial literature offers a novel solution to information overload. The method has been licensed and integrated into commercial financial products, with potential applications beyond finance in medicine, biology, and the behavioural sciences.

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