Revenue Per Employee Definition

Revenue per employee formula.

Revenue per employee definition. Revenue per employee is an important metric used to define the revenue generated by each individual working at a company. Tracking this dollar figure historically and comparing it to peer group companies will make this quantitative dollar amount more meaningful in an. It is used as an efficiency ratio helping to estimate the productivity of the average employee. 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.

The revenue that a company generates over a given period of time divided by the number of employees. The revenue per employee ratio is important for determining the efficiency and productivity of the average employee of a company. 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. Revenue per employee is an efficiency ratio used to determine the revenue generated per individual working at a company.

It helps as a measure of average financial productivity for each employee of the company. In general relatively high revenue per employee is a positive sign that suggests the company is finding ways to squeeze more sales revenue out of each of its workers. Industry and product line characteristics will influence this indicator of employee productivity. Analysts often compare revenue per employee of different companies in the same industry to measure productivity.