Revenue Per Employee Ratio Definition

What is revenue per employee ratio.

Revenue per employee ratio definition. In these cases useful modifications to the basic rpe equation formula might include switching focus to say revenue per dollar of payroll expenditure or gross rpe rather than net. What is revenue per employee. It is important to note that because labour intensity varies between different occupations the average revenue per person differs considerably between industries. This is a measure of performance of human resources of a company.

For many businesses salaries and employee benefits are the largest expenses. To calculate a company s revenue per employee divide the company s total. Revenue per employee measures the amount of sales generated by one employee. 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.

Some would argue of course that profit per employee is what really matters. The revenue per employee ratio is important for determining the efficiency and productivity of the average employee of a company. This ratio gives an idea about how the company will perform in a specific quarter especially considering the revenue vs cost of each employee of the company. Revenue per employee is an efficiency ratio used to determine the revenue generated per individual working at a company.

The term revenue per employee rpe ratio refers to the financial metric that measures the dollar amount generated by each employee of a company. Additionally a company s age can influence its revenue per employee ratio. Revenue per employee formula. It is used as an efficiency ratio helping to estimate the productivity of the average employee.

Revenue per employee is an important financial benchmark because it aids in determining the relative average financial productivity of each worker within a company. Hence a comparison of revenue per employee is generally most meaningful among companies within the same industry and the definition of a high or low ratio should be made with this in mind. It equals the company s total revenue divided by the average number of employees for the period. Revenue per employee is an essential financial ratio.

Revenue per employee is an important ratio that roughly measures how much money each employee generates for the company. It also indicates how efficiently a company is utilizing its human resources. Revenue per employee is the ratio of revenue generated per employee of a company on an average.