--- title: "Financial Benchmarking: 5 Areas to Track Company Performance" description: Learn 5 key areas to benchmark your company’s financial performance—improve profitability, track efficiency, and make smarter decisions using your data. --- [Biz Tips | SVA Certified Public Accountants ](https://accountants.sva.com/biz-tips) # [Financial Benchmarking: 5 Areas to Track Company Performance](https://accountants.sva.com/biz-tips/5-areas-to-benchmark-your-companys-financial-performance) Written by [Adam Hanson, CPA](https://accountants.sva.com/biz-tips/author/adam-hanson) | Mar 11, 2020 You already may have reviewed a preliminary draft of your company’s year-end [financial statements](https://accountants.sva.com/biz-tips/financial-statements-tell-your-businesss-story-inside-and-out). But without a frame of reference, they don’t mean much. That’s why it’s important to compare your company’s performance over time and against competitors. ## Conduct a Well-Rounded Evaluation A comprehensive benchmarking study requires calculating ratios that gauge the following five elements: ### 1. Growth Business size is usually stated in terms of annual revenue, total assets, or market share. Is your company expanding or contracting? An example of a ratio that targets changes in your company’s size would be its year-over-year increase in market share. Companies generally want to [grow](https://accountants.sva.com/services/business-growth-and-development), but there may be strategic reasons to downsize and refocus on core operations. [(Download Video Transcript)](https://accountants.sva.com/hubfs/Video%20FAQ%20Transcripts/How%20to%20Improve%20Financial%20Reporting.pdf) ### 2. Liquidity [Working capital](https://accountants.sva.com/biz-tips/what-is-working-capital-and-why-is-it-important) ratios help assess how easily assets can be converted into [cash](https://accountants.sva.com/biz-tips/do-you-know-why-cash-is-king) and whether current assets are sufficient to cover current liabilities. For example, the acid-test ratio compares the most liquid current [assets](https://accountants.sva.com/biz-tips/are-you-protecting-your-most-valuable-assets) (cash and receivables) to current obligations (such as payables, accrued expenses, short-term loans, and current portions of long-term debt). ### 3. Profitability This evaluates whether the business is making money from operations before considering changes in working capital accounts, investments in capital expenditures, and financing activities. Public companies tend to focus on earnings per share. But smaller ones tend to be more interested in ratios that evaluate earnings before interest, taxes, [depreciation](https://accountants.sva.com/understanding-the-types-of-depreciation-businesses-can-utilize), and amortization. [EBITDA](https://accountants.sva.com/biz-tips/ebitda-what-is-it-and-how-do-you-use-it) ratios allow for comparisons between companies with different capital structures, [tax strategies](https://accountants.sva.com/services/business-tax-services), and [business types](https://accountants.sva.com/biz-tips/business-entity-types-which-is-best-for-your-business). ### 4. Turnover Such ratios as total asset turnover (revenue divided by total assets) or [inventory](https://accountants.sva.com/biz-tips/inventory-an-asset-or-a-liability-that-is-the-question) turnover (cost of sales divided by inventory) show how well the company manages its assets. These [ratios](https://accountants.sva.com/biz-tips/financial-ratios-objectively-measure-business-performance) can also be stated in terms of average days outstanding. ### 5. Leverage Identify how the company finances its operation through debt or equity. There are pros and cons of both. For example, within limits, debt financing is generally less expensive and interest on debt may be tax-deductible. Equity financing, however, can help preserve [cash flow](https://accountants.sva.com/biz-tips/the-importance-of-cash-flow-cash-flow-analysis-sva-cpa) for growing the business because equity investors often don’t require an annual return on investment. ## Seek Input From the Pros Most companies use an outside accounting firm to [compile, review, or audit](https://accountants.sva.com/biz-tips/do-i-need-a-compilation-review-or-an-audit) their preliminary year-end financial results. This is a prime opportunity to conduct a comprehensive benchmarking study. SVA's [professionals](https://accountants.sva.com/professionals) can help take your historical financial statements to the next level by identifying comparable companies, providing access to industry benchmarking data, and recommending ways to improve performance.   *© 2020* [View full post](https://accountants.sva.com/biz-tips/5-areas-to-benchmark-your-companys-financial-performance) ```json { "@context" : "http://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Adam Hanson, CPA" }, "dateModified" : "2025-10-02T21:15:51.748Z", "datePublished" : "2020-03-11T13:15:00Z", "headline" : "5 Elements to Benchmark Your Company's Financial Performance", "image" : { "@type" : "ImageObject", "height" : 627, "url" : "https://cdn2.hubspot.net/hubfs/2939357/5-elements-to-benchmark-your-companys-financial-performance.jpg", "width" : 1200 }, "mainEntityOfPage" : "https://accountants.sva.com/biz-tips/5-areas-to-benchmark-your-companys-financial-performance", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "/hs/hsstatic/content_shared_assets/static-1.4092/img/default-amp-logo.png", "width" : 60 }, "name" : "Biz Tips" } } ```