Calculating the efficiency ratio in Excel is a great way to see how effectively a business is using its resources. It’s a common metric, especially in finance, and it basically shows how much of your income is being eaten up by expenses. Lower is better!

Here’s how you do it:

First, you need your numbers. You’ll need your Non-Interest Expenses (NIE), which are things like salaries, rent, and utilities. Put that number in one cell, maybe A1. Then, you need your Gross Income (GI), which is your total income. Put that in another cell, like B1.

The formula for the efficiency ratio is: (Non-Interest Expenses / Gross Income) * 100. In Excel, if your NIE is in A1 and your GI is in B1, the formula in another cell (like C1) would be =(A1/B1)*100.

After you enter the formula, Excel will show you a decimal. To make it look like a percentage, just click on the cell with the formula, go to the “Home” tab, and click the percentage button. Or, right-click the cell, choose “Format Cells”, select “Percentage”, and pick how many decimal places you want.

For example, if your NIE is $150,000 and your GI is $250,000, you’d put 150000 in A1, 250000 in B1, and =(A1/B1)*100 in C1. Formatting C1 as a percentage will give you 60%. This means 60% of your gross income is going towards non-interest expenses.

Generally, a lower efficiency ratio is a good thing. It means you’re spending less to make more. Businesses always want to keep an eye on this number and try to improve it by either increasing income or cutting expenses.

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