Payroll to Revenue Ratio
Showcases the proportion of a company's revenue spent on total payroll. It indicates how efficiently a company is using its human resources to generate revenue. A high ratio might suggest that a large portion of revenue is consumed by payroll expenses, which could be concerning unless it's an industry norm.
(Total Payroll Expense / Total Revenue) x 100
If a company has a total payroll expense of $500,000 and a revenue of $2,500,000, the Payroll to Revenue Ratio would be 20%.