Revenue Per Employee Define

The smart ceos don t need the details of what you re doing with the workforce they just want to see that metric over time then have a little conversation about the top 5 things.

Revenue per employee define. Revenue per employee is affected by a company s employee turnover rate where turnover is defined as the percentage of the total workforce that leaves voluntarily or is fired each year and. The result is 160 256 41. It helps as a measure of average financial productivity for each employee of the company. Revenue per employee is an essential financial ratio calculated by dividing revenues generated for a specific period by the number of employees in a company.

4000 is the average revenue generated by each employee. Revenue per employee formula. The earnings per employee can be calculated by using net income in place of revenue in the numerator. As such we have 50 000 000 312.

We must divide the total revenue by the number of employees. A company has total net revenue sales of rs. If they begin working on a new product line and hire an additional 25 employees based on the same revenue their revenue per employee ratio will be 100 000 annually. It equals the company s total revenue divided by the average number of employees for the period.

Revenue per employee also called sales per employee is a financial ratio that measures the revenue generated by each employee of the company on average. In 2005 they had a revenue of 50 000 000 and a number of 312 employees. Revenue per employee example. Applying the above formula.

Let s take for example the company xyz. Companies use the formula total revenue total number of employees to determine the revenue per employee. Revenue per employee is the calculation used to determine how productive employees are in a business. Revenue per employee is an operating performance ratio that looks at a company s sales revenue in relation to the number of employees they have.

Industry and product line characteristics will influence this indicator of employee productivity. The revenue per employee ratio is important for determining the efficiency and productivity of the average employee of a company. This formula indicates how productive each employee is in generating revenues for the company. If a company employs 50 people and has a revenue of 7 5m annually their revenue per employee ratio is 150 000 on an annual basis.

Tracking this dollar figure historically and comparing it to peer group companies will make this quantitative dollar amount more meaningful in an.