benchmark

Examples of benchmark in the following topics:

• Benchmarking

  • Comparing the financial ratios of a company to those of the top performer in its class is a type of benchmarking.
  • Benchmarking can be done in many ways, and ratio analysis is only one of these.
  • In benchmarking as a whole, benchmarking can be done on a variety of processes, meaning that definitions may change over time within the same organization due to changes in leadership and priorities.
  • Benchmarking using ratio analysis can be useful to various audiences.
  • Describe how benchmarking can be used to assess the strength of a company

• Expected Risk and Risk Premium

  • Betas equal to 0: Movement of the asset is uncorrelated with the movement of the benchmark.
  • Beta between 0 and 1: Movement of the asset is generally in the same direction as, but less than the movement of the benchmark.
  • Beta equal to 1: Movement of the asset is generally in the same direction as, and about the same amount as, the movement of the benchmark.
  • Beta greater than 1: Movement of the asset is generally in the same direction as, but more than, the movement of the benchmark.
  • Beta is a measure that relates the rate of return of an asset, ra, with the rate of return of a benchmark, rb.

• Beta Coefficient for Portfolios

  • Beta is a normalized variable, which means that it is a ratio of two variances, so you have to compare the volatility of returns to the benchmark volatility.
  • The Beta for this portfolio, when compared with the S&P 500 benchmark, would be -0.5.
  • A Beta of zero in this situation doesn't necessarily mean a risk free asset, it simply means that it is not correlated with the benchmark.

• Ratio Analysis and EPS

  • Ratio analysis and EPS are used to compare the strengths and weaknesses of various companies with industry or company benchmarks.
  • Ratios generally are not useful unless they are benchmarked against something else, like past performance or another company.
  • Ratios generally are not useful unless they are benchmarked against something else, like past performance or another company.

• Provisions of Preferred Stock

  • Sometimes, dividends on preferred shares may be negotiated as floating; they may change according to a benchmark interest-rate index or floating rate.

• Total Debt to Total Assets

  • Ratios generally are not useful unless they are benchmarked against something else, like past performance or another company.

• The Marginal Cost of Capital

  • As a result, the marginal cost of capital often becomes a benchmark number in the decision making process that goes into raising more capital.

• Preferred Stock Rules and Rights

  • Sometimes, dividends on preferred shares may be negotiated as floating; they may change according to a benchmark interest-rate index.

• The Cost of Preferred Stock

  • Sometimes, dividends on preferred shares may be negotiated as floating - they may change according to a benchmark interest rate index.

• Measuring Risk

  • Beta describes the correlated volatility of an asset in relation to the volatility of the benchmark that said asset is being compared to.
  • This benchmark is generally the overall financial market and is often estimated via the use of representative indices, such as the S&P 500.