Based on the financial information for Company XYZ:
Total Revenue = 2,000,000
Total Expenses = 800,000
What is the Efficiency ratio?
Answer: 2,000,000/800,000=2.50
2.50*100=250%
This means for every expenses Rupee the company generates 2.5 in revenue
Example 2:
For example, let’s consider a company with annual revenue of 500,000 and total expenses of 350,000. Then-
= (500,000 / 350,000) * 100 = 142.86%
This indicates that the company generates approximately 1.43 of INR in revenue for every 1 INR of expenses