Define 'power factor'.

Power factor refers to the ratio of real power (used to perform work) to apparent power (the product of current and voltage in the circuit). This value is crucial in electrical systems because it indicates how effectively electrical power is being converted into useful work output. A power factor value of 1 (or 100%) signifies that all the power is being effectively converted to work, while lower values indicate that a portion of the power is being wasted or not utilized effectively.

This concept is particularly important in AC (alternating current) systems where the presence of reactive power can distort the relationship between voltage and current, leading to a decrease in the overall efficiency of the power delivery. In practical applications, understanding and managing power factor is vital for maximizing the efficiency and performance of electrical equipment, reducing energy losses, and minimizing electricity costs.