Revenue Per 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. It equals the company's total revenue divided by the average number of employees for the period.
Revenue per employee is relevant for labor-intensive industries i.e. industries in which human capital is more important than the physical capital for revenue generation.
A similar ratio is net income per employee, which measures net income earned by each employee on average.
Formula
$$ \text{Revenue per Employee} = \frac{\text{Net Revenue}}{\text{Average Number of Employees}} $$
Example
Auditing, tax and consultancy are labor-intensive industries. The big four accounting firms are few of the world's largest professional services firms and their revenue depends exclusively on their human capital. Calculate the revenue per share for each using the data given below for financial year 2013.
Revenue in million US Dollars.
| Revenue | Employees | |
|---|---|---|
| Deloitte | 32,400 | 200,000 |
| PwC | 32,100 | 184,000 |
| EY | 25,800 | 175,000 |
| KPMG | 23,400 | 155,000 |
Solution
| Revenue | Employees | Revenue per Employee | |
|---|---|---|---|
| Deloitte | 32,400 | 200,000 | 162,000 |
| PwC | 32,100 | 184,000 | 174,457 |
| EY | 25,800 | 175,000 | 147,429 |
| KPMG | 23,400 | 155,000 | 150,968 |
by Obaidullah Jan, ACA, CFA and last modified on
