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. Also known as Revenue to Employee Ratio, 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 12, 2022

Latest update: Oct 12, 2022

Date created: Oct 12, 2022

Latest update: Oct 12, 2022