PcM - Profitability

direct salary

portion of salary that is paid by the client

indirect salary

portion of salary that cannot be charged to a client

overhead rate

= office overhead / total direct labor

if overhead rate = 1.50, that means for every $1 paid in direct salary, $1.50 is paid in addition for health insurance, rent, copier, etc.

break-even multiplier

overhead rate of 1.50 so $1+$1.50=$2.50

we need to charge per dollar of direct salary to break even

revenue factor

fee revenue generated for each $1 spent on payroll

utilization rate

direct labor / total labor

quick ratio

measures liquidity

how easily you can turn the business for cash

a higher number than 1.0 means there is more available money than debt

schedule performance index (SPI)

earned value / planned value

a number less than 1.0 means that you have spent more hours to a project than anticipated