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Capital Efficiency
A measure of how effectively a company uses its capital to generate profits, often assessed through metrics like Return on Capital Employed (ROCE).
Implications
The effectiveness with which a company uses its financial resources to generate revenue and achieve its business objectives, often measured by metrics like ROI and asset turnover.
Example
Example: A tech startup improves its capital efficiency by automating operations, reducing costs, and increasing its return on invested capital.
Related Terms
Different from operational efficiency, which focuses on minimizing costs and maximizing output, capital efficiency emphasizes the optimal use of financial resources.
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