Fundamental Glossary / Working Capital & Operational Efficiency
Revenue Per Employee
Revenue divided by the number of employees.
Formula
Revenue / average headcount. Profit per employee is the stricter companion.
What it means
The ratio is a rough productivity measure for people-heavy businesses: IT services, consulting, and some manufacturing. It is almost meaningless for a highly automated plant with a small staff.
Headcount definitions differ. Contract staff who are not on the rolls make the ratio look better than the true labour intensity.
How to read it
Rising revenue per employee, with stable quality and attrition, suggests the firm is scaling. Rising revenue per employee because junior staff were cut can be a margin tactic that hurts delivery later.
What to watch
Acquisitions mid-year distort both revenue and headcount. Use averages, and do not compare a services firm with a refinery on this number.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.