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Guide To Analysing Companies, Fifth Edition by Bob Vause

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7 Measuring efficiency

T HE EFFICIENCY OF A COMPANY can be defined as the relationship between the output of products or services and the input of resources necessary for their delivery. Quantified as a ratio of output to input, the efficiency of one company can be measured over time and compared with that of others. One of the main responsibilities of management is to make efficient use of the human, physical and financial resources available to a company. This chapter considers various means of measuring, assessing and comparing companies’ efficiency of utilisation of each of these three categories of resources.

Practical control of efficiency in companies must be carried out internally. It is the focus of management accounting rather ...

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