Which analysis would help a business understand deviations between actual and planned performance?

Variance analysis is the process that helps a business understand deviations between actual and planned performance by comparing what was budgeted or foreseen against what actually occurred. It provides insights into how much performance deviated from the plan and identifies which specific areas are responsible for those deviations.

For instance, if a company had expected to finish a project within a certain budget but overspent, variance analysis would pinpoint the exact areas of over-expenditure. This helps businesses to adjust their plans accordingly and to understand the reasons for variances, which is vital for future planning and improving financial management.

Other analyses such as benchmarking focus on comparing a company's performance with industry standards or competitors, cash flow analysis emphasizes the inflow and outflow of cash rather than performance against a plan, and cost-volume-profit analysis examines the relationships among costs, revenue, and profit which doesn't directly address performance deviations. Hence, variance analysis stands out as the most direct method for measuring discrepancies between the actual and planned performance.