What primary function does the efficiency index serve?

The efficiency index primarily serves as a measure of operational efficiency across various units. This tool is crucial for organizations that want to assess how effectively resources such as time, materials, and labor are utilized in different processes or departments. By calculating the efficiency index, a company can identify areas where inefficiencies exist and make data-informed decisions to enhance productivity and reduce waste.

Operational efficiency is a key component of overall organizational performance. By focusing on this aspect, the efficiency index helps businesses benchmark their performance against industry standards or internal goals. This empowers managers to pinpoint best practices, which can then be replicated in other areas to foster improvement throughout the organization.

The other options, while related to business performance, do not accurately describe the primary function of the efficiency index. Evaluating financial viability pertains more to cost-benefit analysis and investment appraisal, assessing historical performance is limited to past data without focusing on current operational efficiency, and comparing market strategies involves strategic planning rather than measuring how effectively current resources are utilized.