Efficiency

Definition: 

The ability of a firm to minimise expenses (Operations, Human Resources and Marketing) and effectively manage its assets to generate maximum profit.

Firms can gain efficiencies by cutting costs (cost centres), gaining economies of scale, using more productive technologies in operations. 

Efficient businesses are more profitable (lower costs & fewer assets to deliver increased revenue).

Ratios and Statements:

• Expense Ratio (Income Statement)

• Accounts Receivable Turnover Ratio (Balance Sheet)