Please use your (own words), don't copy and paste, don't use handwriting (use keyboard). i need (references) please

answer the Q by good and perfect answers.

In many businesses, employees are not only the most important assets and key enablers of future success but often the biggest expense (or rather investment). It is therefore important to understand to what extent employees add value to the financial performance of the organization. Employees are often a missing ingredient in accounting and finance (except as an expense) and with a little effort we can calculate the effects of people on financial performance.

In the past, companies used over-simplified KPIs such as revenue per employee. If businesses are to understand the real profit impact of employees then we need to calculate human capital value added (HCVA). To get the HCVA we take all non-employee-related expenses away from the revenue generated and divide this (adjusted profit figure) by the number of full-time employees. HCVA therefore gives us the profitability of the average employee.

Data Collection Method:

The data for this can be easily extracted from the financial accounting systems or the financial statements.

Formula:

HCVA can be calculated by subtracting all corporate expenses except for pay and benefits from the revenue generated and dividing the adjusted profit by the average headcount.

Exercise 1:

(5 marks)

If a company has the following figures:

Revenue: $100,000,000

Total costs: $80,000,000

Employee costs: $30,000,000 ($20,000,000 in pay and $10,000,000 in benefits).

Number of employees: 650

Calculate the HCVA for the company.

Exercise 2:

(5 marks)

If a company has the following figures:

Revenue: $250,000,000

Total costs: $200,000,000

Employee costs: $50,000,000 ($350,000,000 in pay and $15,000,000 in benefits).

Number of employees: 500

Calculate the HCVA for the company. Is this a good HCVA? Why or why not?

Revenue - (Total costs - Employment costs) HCVA FTE