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Glossary

Revenue Per Employee

Fundamental Analysis

Revenue Per Employee (RPE) is a financial metric that measures how efficiently a company is utilizing its workforce to generate revenue. It is calculated by dividing a company*s total revenue by its total number of employees.

Formula: Revenue Per Employee = Total Revenue / Total Employees

RPE is used in fundamental analysis to assess a company*s productivity and profitability. A company with a high RPE indicates that it is generating substantial revenue with relatively fewer employees, which is a positive sign of operational efficiency. This can also indicate that the company is using new technology or automated processes, which results in increased productivity and profitability. On the other hand, a company with a low RPE may suggest that it is not using its workforce effectively, and it is operating expenses are high.

In general, a higher RPE is preferred when compared to peers* average. However, the industry also plays a vital role in RPE comparisons. Many labor-intensive industries like retail and hospitality have relatively lower RPE compared to knowledge-based industries like software companies. Therefore, this metric should be primarily evaluated based on the industry in which the company operates.

In conclusion, Revenue Per Employee (RPE) is a useful financial metric that provides insights into operational efficiency and productivity. It helps investors assess how well a company is using its workforce to generate revenue and can be used to compare companies within the same industry.




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