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4 Examples of the Efficiency Formula

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The efficiency formula is a measure of the efficiency of processes and machines. The basic formula is a ratio of output to input expressed as a percentage:
efficiency = (output / input) × 100

Energy Production

Energy efficiency is the ratio or useful energy to input energy.
efficiency = (useful energy / input energy) × 100
For example, a solar panel that creates 300 watts of electricity from 1500 watts of sunlight:
efficiency = (300 /1500) × 100 = 20%

Energy Consumption

The energy efficiency of a machine that consumes energy is calculated as the useful energy that is output by the machine as compared to the energy consumed. For example, an electric car that consumes 100 kWh resulting in 60 kWh of power to the wheels has efficiency of:
efficiency = (60 / 100) × 100=60%
Energy efficiency is always lower than 100% as machines always generate some waste such as the heat produced by an engine.

Business Processes

The efficiency of business processes is typically calculated in dollar terms based on the value of outputs and cost of inputs. For example, a production processes uses inputs such as labor, electricity, materials and parts that cost $3. The output has a value of $4.
efficiency = (4/3) × 100= 133.3%

Machine Efficiency

Machine efficiency can be measured in terms of energy efficiency or the productive results of equipment. The latter approach uses the value of outputs and cost of inputs. In a month, a drilling machine takes inputs such as labor, electricity, materials and depreciation on the machine itself that cost 50,000 dollars. The machine produces parts with a value of 60,000 dollars.
efficiency = (60,000 / 50,000) × 100=120%
A newer machine drills holes 10 times as fast. The labour costs are the same and the machine wastes less electricity and materials. In a month, the machine consumes inputs of $410,000 and produces outputs with a value of $600,000.
efficiency = (600,000 / 410,000) × 100=146%
Overview: Efficiency Formula
A measure of the efficiency of processes and machines.
Base Formula
efficiency = (output / input) x 100
Related Concepts


This is the complete list of articles we have written about efficiency.
Business Efficiency
Division Of Labor
Economic Efficiency
Efficiency Formula
Efficiency Goals
Jevons Paradox
Machine Efficiency
Management Efficiency
More With Less
Operational Efficiency
Process Efficiency
Resource Efficiency
Specialization Of Labor
Technical Efficiency
Time Efficiency
Value Creation
More ...
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