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Chapter 6. Statement Analysis > Common-Sizing by Headcount

Common-Sizing by Headcount

Headcount, of course, refers to the number of people who are on the payroll at any given time. Particularly if you are in the midst of a downsizing (or, euphemistically, “rightsizing”) situation, it is useful to common size on the basis of headcount. Doing so does not result in the type of information shown by earlier figures in this chapter, where the basis was revenue or assets and the result was a percentage of revenue or assets. In contrast, common-sizing on the basis of headcount usually results in some number of dollars per employee (see Figure 6.12).

Figure 6.12. New Way Tours' actual results for 2004, common sized by headcount, express operating expenses as dollars spent per employee.



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