Backtesting Performance Based on Revenue Per Employee

by Byron on May 3, 2011

I am going to backtest an equal weight index of the top 500 companies over $500 million market cap ranked by revenue per employee.  I have a feeling it outperforms the traditional averages.

I did a brief calculation today of the top ten NDX companies by revenue per employee.  It outperformed for the past two years by about 4%.  A tiny sample, too small to be relevant, but I think I’m on to something.

Along the same lines, I think increasing revenue per employee is probably a pretty good metric as well.

I need better tools.

I think as important as revenue per employee is today, it will be increasingly so in the future.  Companies are built around technology, ideas, and the ability to scale without expensive labor.  You know, the whole jobless recovery thing.

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