To evaluate the performance of a given firm, you need a benchmark to which you can compare its ratios

Issues which we will be bearing in mind in order to benchmark the selecting process are-

A. The size of the company will be similar to that of the particular industry and the overall nature of work should be similar.

B. The company should be belonging to the particular index and it should be belonging to the particular sector like Nasdaq will be including the technological companies so, the technology company can be compared with that of the Nasdaq.

C. The company should also be compared in respect to the risk which has been undertaken by it and it will be compared with the overall industry.

D. The company will also get compared with the benchmark which will be having similar companies which are having similar capital structure.

E. The time duration of survival of the company in the long run along with the life cycle of the company should also be considered and the type of the management of the company should also be considered when we are comparing the ratios for the longer period of time by ascertainment of an identified benchmark.