The following is an extract from the Bayer AG 2012 Annual Report:

The value-based indicators aid management’s decision-making, especially regarding strategic portfolio optimization and the allocation of resources for acquisitions and capital expenditures. The focus at the operational level is on the key drivers of enterprise value: growth (sales), cost efficiency (EBITDA) and capital efficiency (working capital, capital expenditures), since these directly affect value creation.

Discuss

(a) why and how EBITDA is used as a driver for cost efficiency, and

(b) how capital efficiency is determined in relation to working capital and capital expenditures.