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The terms "operational efficiency", "efficiency" and "productivity" are often used interchangeably. An explanation of the difference between efficiency and (total factor) productivity is found in "An Introduction to Efficiency and Productivity Analysis". [1]
The efficiency ratio indicates the expenses as a percentage of revenue (expenses / revenue), with a few variations – it is essentially how much a corporation or individual spends to make a dollar; entities are supposed to attempt minimizing efficiency ratios (reducing expenses and increasing earnings). The concept typically applies to banks.
Productivity is closely related to the measure of production efficiency. A productivity model is a measurement method which is used in practice for measuring productivity. A productivity model must be able to compute Output / Input when there are many different outputs and inputs.
Growth accounting exercises and total factor productivity are open to the Cambridge critique. Therefore, some economists believe that the method and its results are invalid or need to be carefully interpreted and used along with other alternative approaches. [1]
Throughput Accounting, therefore, removes standard cost accounting's reliance on efficiencies in general, and labor efficiency in particular, from management practice. Many cost and financial accountants agree with Goldratt's critique, but they have not agreed on a replacement of their own and there is enormous inertia in the installed base of ...
Workforce productivity can be measured in two ways, in physical terms or in price terms. the intensity of labour-effort, and the quality of labour effort generally. the creative activity involved in producing technical innovations. the relative efficiency gains resulting from different systems of management, organization, co-ordination or ...
Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production process, i.e. output per unit of input, typically over a specific period of time. [1]
Cost accounting has long been used to help managers understand the costs of running a business. Modern cost accounting originated during the Industrial Revolution when the complexities of running large scale businesses led to the development of systems for recording and tracking costs to help business owners and managers make decisions. Various ...