Question

what is the importance of the operational efficiency in the analysis and valuation of finance ?
p.s( with the references please )

Answer 1

Operational efficiency generally tells about how company of firm is able to utilize its asset and equity in generating sales. It is very important factors for FMCG companies and help in valuation as well.

Fixed asset turnover ratio, equity turnover ratio , inventory trunover ratio and other operational efficiency ratios help in gauging the performance of firm and this all ratios are analyse by investors before investing. Better utilization of asset and equity by firm generate better operational efficiency.