Productivity Metrics

Gross Margin is a profitability ratio that measures Gross Profit as a percentage of total revenue. Typically, it is calculated as Gross Profit divided by Revenue. This metric is a key indicator of a company's financial health and operational efficiency.

The LTV/CAC ratio measures the lifetime revenue a customer generates relative to the cost of acquiring that customer. A ratio of 3 or higher is the standard benchmark for sustainable SaaS growth.

Net Profit Margin shows net profit as a percentage of total revenue. It gives the net profit earned for every dollar of revenue generated and is a good indicator of profitability and operating expense management.

Payroll to Revenue Ratio, frequently referred to as Salary to Revenue Ratio, is a productivity metric that measures how effective a business is at utilizing its labour costs to produce revenue. As with any ratio, it's always important to understand both the numerator and the denominator and how changes to either will impact the number.

Profit per Employee is a measure of Net Income for the past twelve months (LTM) divided by the current number of Full-Time Equivalent employees. Because labour needs differ across sectors, this ratio is often used to compare companies within the same industry.

R&D Productivity is a performance measure of how much new revenue is associated with dollars invested into R&D within a technology company.

Revenue per Employee is a measure of the total Revenue for the last twelve months (LTM) divided by the current number of Full-Time Equivalent employees. Also known as Revenue to Employee Ratio, this ratio is among the most universally applicable and is often used to compare companies within the same industry.