Operating Profit per FTE

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Operating profit per full-time-equivalent establishes the operating profit target per staff. Operating profit per FTE is profit before deductions for discretionary profit distributions for cash bonus and discretionary contributions to 401k retirement plan and income tax. Operating profit per FTE before deductions is a more comparable basis since discretionary distributions and taxes vary from firm to firm. Operating profit per FTE is reduced to a common denominator that gives a meaningful basis for comparison of profitability for firms of various sizes. The CAPP spreadsheet model computes the ratio for total staff and technical staff. The Tab-8 Chart of operating profit per FTE compares the ratio to prior years’ and the current year’s profit plan target.

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