Insert the information in the form and the calculator will determine the efficiency ratio.


What is the efficiency ratio?


The efficiency ratio is a measurement of the firm's ability to use it's assets to generate income. The efficiency ratio takes into account various aspects of the firm including the time required to collect cash from customers.


How to calculate efficiency ratio?


To calculate efficiency ratio you should use the following formula:
efficiency ratio = non interest expenses / revenue


example: Bank x has a total revenue of $38,000,000 and $15,000,000 worth of non interest expenses, measure the efficiency ratio?


Using the efficiency ratio formula the asnwer will be:

efficiency ratio = non interest expenses / revenue
efficiency ratio = $15,000,000 / $38,000,000
efficiency ratio = 0.3947


Why use efficiency ratio?


The efficiency ratio is usually used because it helps in analyzing how well the firm is in using it's assets and liabilities internally.


Other people also used:

Financial Leverage

It's the strategic attempt of borrowing money to invest in assets and get the return on those assets to exceed the cost of borrowing them.

Fixed Charge Coverage Ratio

It's a measurement of a firm's capacity to meet fixed charge obligations such as lease expenses and interest expenses.

Gross Margin Percentage

It's the percentage of a company's revenue that is retained after direct expenses like materials and labor.

Interest Coverage Ratio

It's a measurement of a compay's ability to pay it's debt payment's.

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