Revenue Per Employee Calculator
Employees are the most valuable asset for any and the most expensive asset. Revenue per employee measures the number of sales generated by one employee which is helpful to measure the overall efficiency in utilizing its human resources of an organization. It is an important ratio that roughly measures how much money each employee generates for the firm.
Generally speaking a company wants the highest the revenue per employee figure is, the better it is. Companies with higher revenue-per-employee are often more profitable.
Revenue Per Employee Formula
Revenue per Employee is a measure of the total revenue for the last twelve months (LTM) divided by the current number of Full-Time Equivalent employees.
Revenue per employee is calculated as:
Revenue Employee Ratio = Revenue (Total Sales) / Average number of Employees (Full time)
Average Number of Employees = (Opening number of Employees + Closing Number of Employees) / 2
- Usually the number of employees keeps on changing over the period. Therefore, it is preferable to use the average number of employees during the period. The figure for sales revenue can be found in the income statement.
- Revenue per employee is less in the industries which are labor-intensive. On the other hand this metric is higher in the high tech, low labor-intensive companies. Thus, labor demand varies from industry to industry, it is most meaningful to compare a business’s revenue per employee with that of other companies in its industry.
Suppose a company has a total sales of 14,800,000 during the year. It start the year with 6500 full-time employees and with 6800. The revenue per employee of the company in the year is $2,225.56
Sometimes earning per employee is also calculated by using net income, instead of sales revenue, in the above formula. This is also a useful measure of productivity of employees.