Banking institutions perform inter mediation functions and consequently influencernthe level of money stock through their ability to create deposit liabilities. Therefore,rnit is critical for depositors, investors, regulators, and the public at large to havernvested interest in the performance of banking institutions. Performance evaluationrnof bank should be linked to decision models so as to associate the results obtainedrnwith the decision.rnTo this end, this study initiated with the objective of accurately classifYing therncommercial banks in Ethiopia based on their relative efficiency scores has alsornidentified the major financial operating decisions that lead them to betterrnperformance. Introducing the Data Envelopment Analysis model is also the purposernof this study. To sum up, the primary purpose is to demonstrate through thisrnempirical evidence that DEA in conjunction with financial ratio analysis canrneffectively aggregate and reclassifY the perplexing ratios into meaningful financialrndimensions, which enable us to gain insight into the financial operating strategies ofrnbanks. DEA is the index of sum of weighted outputs to sum of weighted inputs. This modelrnis used to classifY six commercial banks in Ethiopia - those have operated in thernindustry for at least two years before 2000 - based on their relative efficiencyrnscores. While others may not agree with the input and output variables selected inrnthis study for the DEA model, this study uses interest income, non-interest income,rnand total loans as outputs and Interest expenses, non-interest expenses, and totalrndeposits as inputs. The financial operating decisions like capital Â· adequacy,rnprofitability, asset utilization, and liquidity for 1995 to 1999 are also capturedrnthrough twelve financial ratios extracted from the banks' financial statements.rnFor the purpose of this study efficiency is defined as an 'intermediary approach'rnwhich examines the bank's function as a financial intermediary between savers 'andrnborrowers. According to the DEA efficiency score derived, this study divides thernbanks into three categories - high, medium, and low DEA efficiency - for financialrnpeer group analysis.rnThe empirical results indicate that those banks with higher DEA scores also havernhigher ratios in capital adequacy, asset utilization and profitability efficiency, andrnlower ratios in financial leverage and liquidity than those with lower DEA scores.rnThat is banks with more capital (in a relative magnitude) tended to engage in higherrnloan risk lending for higher profits; while those with less capital were morernconservative in lending money. This shows that the application of DEA inrnconjunction with financial ratios can not only accurately categorize banks withrnrespect to each other in terms of their DEA efficiencies but can also somehow linkrnthe evaluated efficiencies with the bank's actual financial operating decisions.