Financial Statement Analysis
- Ratio Analysis of Financial Statements (Formula, Types, Excel)
- Ratio Analysis Advantages
- Ratio Analysis
- Liquidity Ratios
- Cash Ratio
- Cash Ratio Formula
- Quick Ratio
- Quick Ratio Formula
- Current Ratio
- Current Ratio Formula
- Acid Test Ratio Formula
- Defensive Interval Ratio
- Working Capital Ratio
- Working Capital Formula
- Net Working Capital Formula
- Changes in Net Working Capital
- Change in Net Working Capital (NWC) Formula
- Cash Flow from Operations Ratio
- Cash Flow Per Share
- Cash Reserve Ratio
- Operating Cycle Formula
- Current Ratio vs Quick Ratio
- Bid Ask Spread
- Liquidity vs Solvency
- Solvency Ratios
- Equity Ratio
- Capital Adequacy Ratio
- Liquidity Risk
- Altman Z Score
- Turnover Ratios
- Inventory Turnover Ratio
- Accounts Receivable Turnover
- Accounts Receivables Turnover Ratio
- Accounts Payable Turnover Ratio
- Days Inventory Outstanding
- Days in Inventory
- Days Sales Outstanding
- Days Sales Uncollected
- Average Collection Period
- Days Payable Outstanding
- Cash Conversion Cycle
- Cash Conversion Cycle (CCC) Formula
- Fixed Asset Turnover Ratio Formula
- Debtor Days Formula
- Working Capital Turnover Ratio
- Profitability Ratios
- Profitability Ratios Formula
- Common Size Income Statement
- Vertical Analysis of Income Statement
- Profit Margin
- Gross Profit Margin Formula
- Gross Profit Percentage
- Operating Profit Margin Formula
- EBIT Margin Formula
- Operating Income Formula
- Net Profit Margin Formula
- EBIDTA Margin
- Degree of Operating Leverage Formula (DOL)
- NOPAT Formula
- Earnings Per Share
- Basic EPS
- Diluted EPS
- Basic EPS vs Diluted EPS
- Return on Equity (ROE)
- Return on Capital Employed (ROCE)
- Return on Invested Capital (ROIC)
- Return on Sales
- ROIC Formula (Return on Invested Capital)
- Return on Investment Formula (ROI)
- ROIC vs ROCE
- ROE vs ROA
- Cash on Cash Return
- Return on Total Assets (ROA)
- Return on Average Capital Employed
- Capital employed Employed
- Return on Average Assets (ROAA)
- Return on Average Equity (ROAE)
- Return on Assets Formula
- Return on Equity Formula
- DuPont Formula
- Net Interest Margin Formula
- Earnings Per Share Formula
- Diluted EPS Formula
- Contribution Margin Formula
- Unit Contribution Margin
- Revenue Per Employee Ratio
- Operating Leverage
- EBIT vs EBITDA
- Capital Gains Yield
- Tax Equivalent Yield
- LTM Revenue
- Operating Expense Ratio Formula
- Overhead Ratio Formula
- Variable Costing Formula
- Capitalization Rate
- Cap Rate Formula
- Comparative Income Statement
- Capacity Utilization Rate Formula
- Total Expense Ratio Formula
- Markup Percentage Formula
- Efficiency Ratios
- Dividend Ratios
- Debt Ratios
- Debt to Equity Ratio
- Debt Coverage Ratio
- Debt Ratio
- Debt to Asset Ratio Formula
- Coverage Ratio
- Coverage Ratio Formula
- Debt to Income Ratio Formula (DTI)
- Capital Gearing Ratio
- Capitalization Ratio
- Interest Coverage Ratio
- Times Interest Earned Ratio
- Debt Service Coverage Ratio (DSCR)
- DSCR Formula (Debt service coverage ratio)
- Financial Leverage Ratio
- Financial Leverage Formula
- Degree of Financial Leverage Formula
- Net Debt Formula
- Leverage Ratios
- Leverage Ratios Formula
- Operating Leverage vs Financial Leverage
- Current Yield
- Debt Yield Ratio
- Solvency Ratio Formula
Revenue Per Employee Ratio Formula (Table of Contents)
Revenue Per Employee Ratio Formula
Revenue per employee is an important financial ratio calculated by dividing revenues generated for a specific period by the number of employees in a company. It helps as a measure of average financial productivity for each employee of the company.
Revenue Per Employee Formula
Revenue Per Employee Formula Examples
Here, we would consider four firms from the same industry for calculating this ratio and see how they compare against each other.
|Name of Company||Revenues for FY 2017 (in Million US$)||Number of Employees||Sales Per Employee Ratio|
Compared on the basis of sales per employee ratio, Company UVW comes out on top followed by Company XYZ, Company ABC, and Company EFG in the descending order of ratio values. This broadly indicates which company was best able to utilize its employees in terms of productive assets during a specific financial year.
Revenue Per Employee Formula – Tech Industry
Below table provides you with the details of sales per employee of top Tech companies.
|S. No||Name||Sales Per Employee (Annual)|
- We note that Facebook has the highest sales per employee.
- All of this list above makes more than half a million sales per employee.
- Interesting to note that Twitter is on the list with $681,914 per employee.
Sales Per Employee – Auto manufacture Industry
Below is the list of top manufacturing companies with their Sales per employees.
|S. No||Name||Sales Per Employee (Annual)|
|6||Honda Motor Co||615,978|
|7||Fiat Chrysler Automobiles||538,122|
|10||Kandi Technologies Group||245,715|
- We note that Ferrari has the highest sales per employee with approx. revenue of $1.1 million per employee.
- Fiat on the other hand, makes around $538,122 per employee.
- In general, top tech companies revenue per employee is more than manufacturing companies revenue per employee.
Revenue Per Employee Formula – Banking Industry
Below is the list of top banks with their revenue per employee Formula.
|S. No||Name||Sales Per Employee (Annual)|
|1||East West Bancorp||502,428|
|4||Credit Suisse Group||432,640|
|5||Bank of America||417,952|
|7||Bank of N.T Butterfield||401,880|
|8||Royal Bank of Canada||388,697|
|10||Bank of Montreal||377,244|
- Overall, banks also make far less sales per employee as compared to the tech industry
- JPMorgan makes an Annual revenue of $403,485 per employee.
Explanation of Sales Per Employee Ratio Formula
This ratio helps determine how productively a company is able to utilize its employees and contribute to its business growth. If a company has higher revenue per employee formula, it means that the company is generally doing well and trying to make optimum utilization of available manpower in form of its employees. However, labor-intensive companies typically tend to have lower ratios as compared to those which require a lesser amount of labor. This is why generally this ratio is employed to compare the performance of companies within an industry.
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When we compare to this per employee of Facebook, Google, and Amazon, we note that Facebook has the highest annual this employee at $1.929 million per employee! Google has this employee of $1.457 million and Amazon has a revenue of $392,034 per employee
Use and Relevance of Revenue Per Employee Formula
Other Similar Ratios:
There are other similar ratios which are calculated by dividing net income instead of revenues from the number of employees to try and see how a company fares in terms of employee-based productivity. Revenues are an easily understood term and often used in financial ratio calculations, which helps explain its relevance in calculating this ratio.
Role of Employee Turnover Rate:
It must also be remembered that the employee turnover rate impacts this financial ratio as well. Employee turnover rate is the percentage of the total workforce which voluntarily leaves a company during a year and needs to be replaced. This should not be confused with employee attrition which refers to employees who have either retired or were terminated by the company.
Relevance of Sales Per Employee
Keeping in mind all these factors, only the average number of employees is usually utilized for calculating sales per employee ratio formula. Employee represents a unique asset to a business and if the concept of asset utilization is applied carefully in nurturing employees with a high level of productivity, a company can potentially perform much better than its peers. Such companies tend to have relatively better sales per employee ratios within their specific industry.
How to Use Revenue Per Employee Formula?
The ratio by itself is of little use without any frame of reference, hence it should be read against the historical ratios for same company over a number of years to be able to see if the ratios are rising or falling. This would help indicate improving or declining level of employee productivity. Then again, the ratios should be compared with industry peers and how they have performed over the years.
Revenue Per Employee Formula Calculator
You can use the following Revenu per Employee Ratio Ratio Calculator.
|Revenue per Employee Formula =||
Revenue Per Employee Formula in Excel (with excel template)
Let us now do the same example above in Excel. This is very simple. You need to provide the two inputs of Revenue and Number of Employees.
You can easily calculate the Revenue per employee ratio formula in the template provided.
You can download this revenue per employee ratio template here – Revenue per Employee Excel Template
Revenue per Employee Formula Video
This has been a guide to Revenue per employee ratio, its uses along with practical examples. Here we also provide you with Sales per employee Calculator with downloadable excel template.