What is the difference?

# Revenue per Employee vs Profit per Employee

Revenue per Employee

Profit per Employee

#### What is it?

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. This ratio is among the most universally applicable and is often used to compare companies within the same industry.

Profit per Employee is a measure of Net Income for the past twelve months (LTM) divided by the current number of Full-Time Equivalent employees. Because labour needs differ across sectors, this ratio is often used to compare companies within the same industry.

#### Formula

ƒ Sum(Revenue LTM) / Count(Full-Time Equivalents)
ƒ Sum(Net Profit) / Count(Full-Time Equivalents)

#### Example

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. 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.

If a company employs 50 people and has profits of \$1.0M annually, their Profit per Employee is \$20,000 on an annual basis. If the company invests in employee training and more efficient processes and sees their profits grow to \$1.5M annually, based on the same number of employees, their Profit per Employee will be \$30,000 annually.

#### Published and updated dates

Date created: Oct 6, 2019

Latest update: Jun 10, 2021

Date created: Oct 6, 2019

Latest update: Mar 15, 2021