efficiency ratio

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Efficiency Ratio

In banking, a ratio of expenses to revenue. For example, if a bank spends $10 million and makes $15 million in a given month, its efficiency ratio is .67. Banks desire a lower efficiency ratio because this means that the bank is making considerably more than it is spending and is therefore on sound fiscal footing. One way to conceptualize the efficiency ratio is to say it is the measure of what a bank must spend in order to make one dollar. In the above example, the bank must spend 67 cents.

efficiency ratio

The ratio of leasable space to gross space in a building.When planning a building, it is important to balance the need to maximize the efficiency ratio in order to lease the maximum amount of space possible,against the aesthetic need to have wide corridors and open spaces.

References in periodicals archive ?
Treading in the land of sub 40 percent efficiency ratios is familiar territory for Bank of the Ozarks.
Wall Street investors appreciate the earnings boost typically reflected by low efficiency ratios, too.
However, serious operational problems can lurk beneath low efficiency ratios.
of Conway set its sights on achieving a sub-40 percent efficiency ratio.
These sufficiency and efficiency ratios provide additional information (over traditional financial ratios) about the relationship between cash flow from operations and other important operating variables.
Efficiency ratios evaluate how well the company generates cash flows relative to other years and other companies.

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