The average of three different expense efficiencies (fixed, variable, and advertising expenses)
One of the main purposes behind the Pentane Operating Systems (PentaneOS) is to create real-time clarity as to how efficiencies (or lack thereof) are functioning inside a company – knowing that efficiency drives profitability.
With that, there are three primary areas of efficiency that are critically important and tracked inside the PES. These include efficiency around fixed, variable, and advertising expenses and their impact on the underlying business.
How should you use PES? Great question. The score is based on a 0 to 100 point scale, which is built on the average of the three different expense efficiencies to create the PES over the given period of time. The higher the PES out of 100, the more efficient the overall business is performing.
Based on the information and clarity gleaned from PentaneOS, you’ll have some direction on making adjustments, or areas to focus on, that should promote higher PES over time. So look for up or down trends in PES to get an idea of how the company is tracking.
If you’re ever wondering how the overall health of your business is performing, your PES is a great indicator.
You’ll notice your PES is a direct correlation to your net profit. If your net profit is in the green, you will have a high PES.