Wednesday, September 05, 2007

The Revenues per Employee Ratio

I heard about the Revenues per Employee Ratio at an investment luncheon many years ago, where the CFO of a mid cap company was explaining why his company was so superior to their large cap competitors, because they could bring in so much more per employee. Occasionally I read about this ratio but not very often. I decided to do a quick analysis of a few large oil and gas companies to see what their revenues per employee was and if there was any correlation to their return for the last 52 weeks. I also checked the net income per employee. The stocks I used were ConocoPhillips (COP), Exxon Mobile (XOM), Chevron (CVX), BP (BP), and Total (TOT), a large French petroleum and natural gas company. Here is what I found:

Revenues per Employee:

Net Income per Employee:

You will notice that in general, the higher the revenue or income per employee, the higher the return. Maybe this warrants further investigation.

Please note: the blue line is not a trend line. The points on the line represent the 52 week return for that particular stock. I was in a rush to create these and couldn't get Excel to create two columns side-by-side with a separate axis for each.

Author does not own any of the above.

By Fred Fuld at

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