What formula can be used to assess efficiency ratio?

The efficiency ratio is a critical performance metric that measures how well resources are converted into productive outputs. The correct formula to assess the efficiency ratio is calculated by taking the useful output energy divided by the useful input energy. This method provides a clear view of how efficiently a system utilizes its inputs to produce outputs.

When assessing performance, it is important to distinguish between merely looking at expenses and revenues, which is what option B proposes. That alternative focuses on financial metrics rather than operational efficiency, which can obscure valuable insights into resource use. The efficiency ratio assesses effectiveness in the context of energy, resources, or time utilized versus those that are consumed, making it a more aligned choice for evaluating efficiency.

Overall, this ratio helps businesses and organizations identify areas for improvement in their processes, driving better resource management and operational effectiveness.