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I respectfully disagree. From a short term investment perspective, then yes, perhaps I would be interested in profit/employee ratio. However, from an holistic e
by mojomark 9y ago
I respectfully disagree. From a short term investment perspective, then yes, perhaps I would be interested in profit/employee ratio. However, from an holistic economical health and long term investment perspective, I want to see the top revenue/employee generators.
Why is that? Because revenue is a pure measure of productivity, whereas profit is a measure of income after a number of filters (deductions are applied - some of which are subjective) have been applied. Using revenue, I can see how much horsepower a company is contributing to society.
It all boils down to what your looking at the data for.
If I'm looking to hire one person to lift kegs of beer into my truck everyday (this is me dreaming) I'm more interested in the big lady doing more absolute work (e.g. lifting 350 vice 300 lb).
- lpolovets 9y agoI get what you're saying, although my view is a little different. Where we agree is that it's key to measure the horsepower a company is contributing to society. However, my perspective is that profit is a better approximation of that than revenue.[0] Revenue is often more reflective of input costs than value generated. For example, if you buy $900k of steel, spend $25k doing something to it, and then sell the resulting product for $1m, then how much value did you create? I'd argue that it's the profit ($75k) and not the revenue ($1m). [0] That said, profit isn't a perfect metric either. By that measure, Amazon contributes almost nothing to society. Some combination of R&D reinvestment and contribution margins is probably a better metric.