Operational Efficiency Ratio Calculator

✖Operating Expense is an expense incurred in carrying out an organization's day-to-day activities, but not directly associated with production.ⓘ Operating Expense [OPEX]			+10% -10%
✖The Cost of Goods Sold is the direct costs attributable to the production of the goods sold by a company.ⓘ Cost of Goods Sold [COGS]			+10% -10%
✖Net Sales are the number of sales generated by a company after the deduction of returns, allowances for damaged or missing goods, and any discounts allowed.ⓘ Net Sales [NS]			+10% -10%

✖Operational Efficiency Ratio measures how efficiently a company utilizes its resources to generate revenue and profit.ⓘ Operational Efficiency Ratio [OER]

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Formula

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Operational Efficiency Ratio

Formula

`"OER" = ("OPEX"+"COGS")/"NS"`

Example

`"0.458389"=("1255"+"40000")/"90000"`

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Operational Efficiency Ratio Solution

STEP 0: Pre-Calculation Summary

Formula Used

Operational Efficiency Ratio = (Operating Expense+Cost of Goods Sold)/Net Sales
OER = (OPEX+COGS)/NS
This formula uses 4 Variables

Variables Used

Operational Efficiency Ratio - Operational Efficiency Ratio measures how efficiently a company utilizes its resources to generate revenue and profit.
Operating Expense - Operating Expense is an expense incurred in carrying out an organization's day-to-day activities, but not directly associated with production.
Cost of Goods Sold - The Cost of Goods Sold is the direct costs attributable to the production of the goods sold by a company.
Net Sales - Net Sales are the number of sales generated by a company after the deduction of returns, allowances for damaged or missing goods, and any discounts allowed.

STEP 1: Convert Input(s) to Base Unit

Operating Expense: 1255 --> No Conversion Required
Cost of Goods Sold: 40000 --> No Conversion Required
Net Sales: 90000 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

OER = (OPEX+COGS)/NS --> (1255+40000)/90000

Evaluating ... ...

OER = 0.458388888888889

STEP 3: Convert Result to Output's Unit

0.458388888888889 --> No Conversion Required

FINAL ANSWER

0.458388888888889 ≈ 0.458389 <-- Operational Efficiency Ratio

(Calculation completed in 00.004 seconds)

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Created by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

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< 11 Financial Institutions Management Calculators

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Go Loan Loss Provision Coverage Ratio = (Pre-Tax Income+Loan Loss Provision)/Net Charge Offs

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Go Loan Default Rate = modulus(Number of Loans Defaulted)/(Total Number of Loans Issued)

Capital Adequacy Ratio

Go Capital Adequacy Ratio = (Tier One Capital+Tier Two Capital)/Risk Weighted Asset

Operational Efficiency Ratio

Go Operational Efficiency Ratio = (Operating Expense+Cost of Goods Sold)/Net Sales

Return on Operating Assets

Go Return on Operating Assets = modulus(Net Income)/Operating Assets

Net Interest Margin

Go Net Interest Margin = Net Interest Income/Average Interest Earning Assets

Cash Reserve Ratio

Go Cash Reserve Ratio = (Cash Reserves/Net Demand & Time Liabilities)*100

Tier 1 Capital Ratio

Go Tier One Capital Ratio = Tier One Capital/Risk Weighted Asset

Credit Deposit Ratio

Go Credit Deposit Ratio = (Total Advances/Total Deposits)*100

Debt Yield

Go Debt Yield = Net Operating Income/Loan Amount

Net Worth

Go Net Worth = Total Assets-Total Liabilities

Operational Efficiency Ratio Formula

Operational Efficiency Ratio = (Operating Expense+Cost of Goods Sold)/Net Sales
OER = (OPEX+COGS)/NS

What is Operating Efficiency Ratio?

The Operational Efficiency Ratio is commonly used in the banking industry to assess how efficiently a bank is operating. Operating expenses typically include costs related to sales, marketing, administration, research and development, and other expenses directly associated with running the business operations. Total revenue encompasses all the income generated by the company from its core business activities, including sales revenue, service revenue, and any other sources of revenue.
A lower Operational Efficiency Ratio indicates better operational efficiency, as it suggests that the company is able to generate more revenue relative to its operating expenses. Conversely, a higher ratio suggests lower operational efficiency, as it indicates that a larger portion of the company's revenue is being consumed by operating expenses.
Analyzing the Operational Efficiency Ratio over time or comparing it to industry benchmarks can provide valuable insights into the company's performance and operational effectiveness.

How to Calculate Operational Efficiency Ratio?

Operational Efficiency Ratio calculator uses Operational Efficiency Ratio = (Operating Expense+Cost of Goods Sold)/Net Sales to calculate the Operational Efficiency Ratio, The Operational Efficiency Ratio formula is defined as a financial metric used to evaluate how efficiently a company is operating its core business activities. Operational Efficiency Ratio is denoted by OER symbol.

How to calculate Operational Efficiency Ratio using this online calculator? To use this online calculator for Operational Efficiency Ratio, enter Operating Expense (OPEX), Cost of Goods Sold (COGS) & Net Sales (NS) and hit the calculate button. Here is how the Operational Efficiency Ratio calculation can be explained with given input values -> 0.458378 = (1255+40000)/90000.

FAQ

What is Operational Efficiency Ratio?

The Operational Efficiency Ratio formula is defined as a financial metric used to evaluate how efficiently a company is operating its core business activities and is represented as OER = (OPEX+COGS)/NS or Operational Efficiency Ratio = (Operating Expense+Cost of Goods Sold)/Net Sales. Operating Expense is an expense incurred in carrying out an organization's day-to-day activities, but not directly associated with production, The Cost of Goods Sold is the direct costs attributable to the production of the goods sold by a company & Net Sales are the number of sales generated by a company after the deduction of returns, allowances for damaged or missing goods, and any discounts allowed.

How to calculate Operational Efficiency Ratio?

The Operational Efficiency Ratio formula is defined as a financial metric used to evaluate how efficiently a company is operating its core business activities is calculated using Operational Efficiency Ratio = (Operating Expense+Cost of Goods Sold)/Net Sales. To calculate Operational Efficiency Ratio, you need Operating Expense (OPEX), Cost of Goods Sold (COGS) & Net Sales (NS). With our tool, you need to enter the respective value for Operating Expense, Cost of Goods Sold & Net Sales and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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