I am doing an analysis on a company and am trying to financially figure out how effective and efficient the company is.
I can see from profitability ratios (return on assets/equity, gross/net profit margin) and activity ratios (net asset turnover, stock-holding period, creditor payment) how effective the company is.
What ratios could be used to determine efficiency.
I am using the following definitions of effectiveness and efficiency:
Effectiveness is a focus more on outputs, products or services and revenues.
Efficiency is a focus on inputs use of resources and costs.
I can see from profitability ratios (return on assets/equity, gross/net profit margin) and activity ratios (net asset turnover, stock-holding period, creditor payment) how effective the company is.
What ratios could be used to determine efficiency.
I am using the following definitions of effectiveness and efficiency:
Effectiveness is a focus more on outputs, products or services and revenues.
Efficiency is a focus on inputs use of resources and costs.