Revenue Per Employee Vs Profit Per Employee

Profit per employee therefore focuses companies on intangible intensive value propositions and in turn on talented people those who with some investment can produce valuable intangibles.

Revenue per employee vs profit per employee. Revenue per employee is the ratio of revenue generated per employee of a company on an average. That s a 16 decline and helps explain why net income has been plunging at amazon and why its guidance for the third quarter of 2012 calls for an operating loss of between 50 million and. 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. The revenue per employee figure listed above for amazon 855 463 is a steep drop from the prior year 2010 when each amazon worker generated 1 014 955.

Written by ed kless. Revenue per employee is an essential financial ratio. If a company employs a high proportion of part time workers employee numbers will have to be adjusted to full time equivalent numbers. The research also includes the profits and losses per employee of some of the most recognisable companies in the world including facebook walmart walt.

Profit per employee is the total revenue less of operating expenses divided by the total number of full time employees. 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. Revenue per employee is an important ratio that roughly measures how much money each employee generates for the company. In a recent article by lowell bryan a director in mckinsey company s new york office the author postulates that the new metric of corporate performance is profit per employee.

In other words this metric assesses how well a company is able to leverage its manpower in order to make more revenue. The team at tipalti sourced data from the fortune 500 list for some of the biggest companies in the world and divided each company s annual profits and revenue by their number of employees to reveal the profit and revenue per employee. 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. To calculate a company s revenue per employee divide the company s total.

One way to improve a company s profit per employee is simply to shed low profit employees. Vodacom has by far the highest revenue and profit per employee out of the local mobile operators0 indicating that its staff members are more efficient and productive than its competitors. The term revenue per employee rpe ratio refers to the financial metric that measures the dollar amount generated by each employee of a company. He begins let s get right to the point.