Basically, you want to look for 2 things: mastery & fluency. Mastery is when the child can read the letter (not say the name, but say the sound of the letter) consistently - 90% of the time or more. Fluency is being able to not only consistently "read" the letter, but being able to do so quickly.
So, you want to look for her being able quickly and accurately identify the letter sound. Also, it's important to "test" her with other letters as well. In other words, it's not as impressive if she can say the sound of "t" when all you're doing is showing her flashcards of "t." But, if you are showing flashcards of 10 different letters, and she can still say "t" when it's mixed up with other letters, that's even better.
Of course, being able to say a letter sound when it's in the context of a word (e.g., to be able to pronounce the "t" sound in the word "cat") is even better, but when you are first teaching letters and she doesn't have enough letter sounds to be able to read whole words, this is less relevant.