Net
Income Increases to Pay Increases = change in net
income / change in salaries, wages and benefits
This
ratio shows whether net income is increasing faster than
wages (in dollar terms).
A ratio
of less than 1:1 (100%) indicates that profitability
increases are less than the increases in wages.
A
recurring ratio of less than 1:1 (100%) indicates
eroding profits and is a cause for concern.
This
ratio calculates the effect in dollar terms. The
analyst should also calculate percent increase in net
income to percent increase in salaries, wages and
benefits.
The ratio of net income increase to pay increases is included in
the financial statement ratio analysis spreadsheets
highlighted in the left column, which provide
formulas, definitions, calculation, charts and
explanations of each ratio.
The ratio of net income increases to pay increases
is
listed in our net
income ratios.
The net income
increases to pay increases ratio and other ratios are key
to understanding financial statements. Our
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See list
of ratios , or the financial statement ratio
analysis spreadsheets which are not highlighted in the
left column, to see which other ratios are calculated
and explained in our spreadsheets.
The net income increase to
pay increases ratio may be included in our
custom 1, 3 or 5 period financial
statement ratio analysis spreadsheet.
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