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

Revenue per Employee =Net Revenue
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.

RevenueEmployees
Deloitte32,400200,000
PwC32,100184,000
EY25,800175,000
KPMG23,400155,000

Solution

RevenueEmployeesRevenue
per Employee
Deloitte32,400200,000162,000
PwC32,100184,000174,457
EY25,800175,000147,429
KPMG23,400155,000150,968

Written by Obaidullah Jan, ACA, CFA <--- Hire me on Upwork