# Profit per Employee

Date created: Oct 12, 2022  •   Last updated: Oct 12, 2022

## What is Profit per Employee?

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.

### Profit per Employee Formula

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

### How to calculate Profit per Employee

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.

### Start tracking your Profit per Employee data

Use Klipfolio PowerMetrics, our free analytics tool, to monitor your data. Choose one of the following available services to start tracking your Profit per Employee instantly.

### How to visualize Profit per Employee?

Compare your Profit per Employee year-over-year to refine your hiring and staffing plan to reach the optimal ratio. Take a look at the chart for an idea of what tracking your data could look like:

### Profit per Employee visualization example

Profit per Employee

#### Bar Chart

Here's an example of how to visualize your Profit per Employee data in a bar chart and compare your performance to previous periods.

Profit per Employee

#### Chart

Measuring Profit per Employee

## More about Profit per Employee

Mostly used to compare companies within the same industry to one another, geography, labour costs, and company stage will all impact this ratio.

Unlike Revenue per Employee and Expenses per Employee, this ratio considers both income and costs. This makes it a good summary metric, but hides some details that are exposed by the other two KPIs.

As with any metric that measures employee efficiency, improvements are gained either with investments in training and culture or by investing in processes and automation (the latter can also be used to reduce the number of employees needed).

### Recommended resources related to Profit per Employee

McKinsey and the new metrics of corporate performance