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Revenue efficiency This ratio is quite straight-forward. How much revenue does a company need to take in to produce how much net earnings? While this ratio will differ between business models, it is a good comparison to show how one company sits compared to its competitor. To calculate:
N= per dollars of revenue Revenue Efficiency = (Net earnings / Revenue) x N Charting this ratio historically will also give you an idea of future prospects. Ultimately an investor would like this number to be as high as possible. |
