Thesis: Sales per Employee Ratio

Sample Thesis Paper

This ratio is calculated by dividing the revenue figure by the total number of employees in the company. As is the case with the Fixed Asset Turnover Ratio, the Sales per Employee is better the greater it is. This ratio is also not highly useful when studied in isolation and have been criticized by Wiehle (2005) as ‘personnel costs may be skewed by changes in contributions to social security or union agreements and is only meaningful in connection to other operating expenses and margins’ (p.34).

It has to be compared to past data for the company and also to industry averages to understand whether the workers of the company are more productive now in comparison to past periods or in relation to competitors. This ratio provides a very useful indication of the yield of the employees and whether they are performing better or worse in relation to the past or in comparison with rival firms. A rising sales per employee ratio suggests that company’s operations are optimized, new capital investment has improved working or company is able to sell products better than its competitors (McClure 2004).

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