Efficiency ratios measure how productively the business uses its capital base to generate revenue and cash. Growth metrics measure how fast it's expanding. Together they reveal whether revenue growth is creating real shareholder value or destroying it through capital absorption.

A company growing revenue 30% while consuming 50% more capital each year is destroying value; a company growing revenue 15% while consuming 5% more capital is compounding wealth. The right combination — high growth + capital efficiency — is the structural source of the largest long-term returns. Three core efficiency ratios.

Asset turnover = Revenue ÷ Total Assets. Asset-light businesses (retail, services, software) run high; asset-heavy (utilities, industrials) run low. Inventory turnover = COGS ÷ Average Inventory.

Fast-moving consumer goods turn 10-20x; durable goods 4-8x. Cash conversion cycle = DIO + DSO − DPO. Negative cycles (Amazon, Walmart, Costco) signal supplier-financed scale and bargaining power.