Financial Ratios Efficiency is a measure of how well a business is using its resources to generate profits. Put simply, it’s the ratio of gross income to net income, which shows how much money a company makes with the resources it has available. A high financial ratio efficiency means that a company is doing well with the resources available to them, while a low ratio can indicate poor management or resource allocation. The ratio of assets to liabilities is another important indicator of financial efficiency, showing how effective a company is at leveraging their funds for maximum return. By comparing several financial ratios across different companies and over time, businesses can see where they need to improve in order to stay competitive.