EX 12-27 Revenue per professional staff
The accounting firm of Deloitte & Touche is the largest international accounting firm in the world as ranked by total revenues. For the last two years, Deloitte & Touche reported the following for its U.S. operations:
2009 2008 Revenue (in billions) $26.1 $27.4 Number of professional staff (including partners) 139,760 133,100
a. For 2009 and 2008, determine the revenue per professional staff. Round to the nearest thousand dollars.
b. Interpret the trend between the two years.
Answer:
a.
Revenue per professional staff, 2009:
760,139 000,000,100,26$
= $187,000 rounded
Revenue per professional staff, 2008:
100,133 000,000,400,27$
= $206,000 rounded
b. The revenues declined between the two years from $27.4 billion to $26.1 billion, or 4.7% [($26.1 – $27.4)/$27.4]. Revenues have declined, mostly due to the worldwide recession during this period. The number of employees has grown, from 133,100 to 139,760, or 5% [(139,760 – 133,100)/133,100]. As a result, the revenue per professional staff employee has declined by approximately $19,000, from $206,000 to $187,000. This decline in efficiency is due to the world recession experienced during this period of time. It is interesting that Deloitte expanded staff during this period, even while revenues declined. Deloitte is likely staffing for an anticipated recovery. There is some risk, because there is a near-term loss of efficiency from this strategy.
2009 2008 Revenue (in billions) $26.1 $27.4 Number of professional staff (including partners) 139,760 133,100
a. For 2009 and 2008, determine the revenue per professional staff. Round to the nearest thousand dollars.
b. Interpret the trend between the two years.
Answer:
a.
Revenue per professional staff, 2009:
760,139 000,000,100,26$
= $187,000 rounded
Revenue per professional staff, 2008:
100,133 000,000,400,27$
= $206,000 rounded
b. The revenues declined between the two years from $27.4 billion to $26.1 billion, or 4.7% [($26.1 – $27.4)/$27.4]. Revenues have declined, mostly due to the worldwide recession during this period. The number of employees has grown, from 133,100 to 139,760, or 5% [(139,760 – 133,100)/133,100]. As a result, the revenue per professional staff employee has declined by approximately $19,000, from $206,000 to $187,000. This decline in efficiency is due to the world recession experienced during this period of time. It is interesting that Deloitte expanded staff during this period, even while revenues declined. Deloitte is likely staffing for an anticipated recovery. There is some risk, because there is a near-term loss of efficiency from this strategy.
