It's a measure of efficiency. A company that takes 100 people to produce $100 of profit isn't as efficient as a company that produces $100 of profit with one p

It's a measure of efficiency. A company that takes 100 people to produce $100 of profit isn't as efficient as a company that produces $100 of profit with one person. How this ratio changes over time is a measure of scalability. If a one person company goes from $100 profit to $200 profit after doubling the number of people, that's more scalable than a 100 person company going from $100 profit to $200 after doubling the number of people.