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You can't divide market capitalization by number of employees and compare that with "yearly" salary figure. A better comparison would be to divide revenue by nu
by aub3bhat 10y ago
You can't divide market capitalization by number of employees and compare that with "yearly" salary figure. A better comparison would be to divide revenue by number of employees.
- amelius 10y agoAt least explain why this is not a good first-order comparison.
- planteen 10y agoYou are going to have high market cap per employee in asset rich companies like oil producers and REITs. The value in those cases is primarily the mineral and real estate assets, not the employees, so tying salaries to it doesn't make a lot of sense.
- amelius 10y agoYes, but in the case of silicon valley, the actual assets aren't that big.
- oli5679 10y agoAnnual salaries come from our weird convention of defining years as groups of 365 days. A software engineer can earn $100k/year but also $1m/decade. Neither is comparable to a company being worth $xbillion because you're comparing stocks with flows.
- danmaz74 10y agoEven better, value added per employee.