This paper proposes a measure to assess firm performance which is based in neoclassical production theory and yet can be empirically estimated with widely available financial accounting ratios. A translog cost function is estimated, and fitted per-unit average cost figures are generated based upon the firm's individual characteristics and industry norms. The deviation of a firm's actual average per-unit cost from the fitted value is proposed as a predictor of firm profitability. This measure is then tested on firms in the steel industry. It is shown that the accounting ratios generate a cost function which behaves in accordance with neoclassical microeconomic theory, and accounting profits are indeed found to be inversely related to the calculated efficiency measure.