Posted in Finance, Accounting and Economics Terms, Total Reads: 381
Definition: Revenue Per Employee
Revenue per employee is the ratio of the total revenue generated by a company by doing business to the total number of employees in the organization. Revenue per employee is significant in showing the financial position of a company, and how much the company earns for every person employed. A critical proportion that takes a gander at an organization's deals in connection to the quantity of representatives they have.
This proportion is most valuable when thought about against different organizations in the same business. In a perfect world, an organization needs the most noteworthy income per worker conceivable, as it signifies higher profitability.
Suppose, Infosys has a revenue of 1,00,00,000 rupees and has an employe strength of 100 employees. Thus, revenue per employee is 1,00,000 rupees. It can be used for internal imprevements in the company and compare it with peers too. If, TCS has a revenue per employee of 1,20,000 rupees. Thus, TCS is working in a better efficiency compared to TCS as it is generating better revenue w.r.t. the number of employees working. A new applicant in the company can also use this ratio to compary the company’s working capabilities.
• Compare peer group working efficiency
• Internal improvement in the working
• Lower ratio can create a negative image of the company among potential employees which could further hurt the company