Businesses use the FTE calculations for a variety of purposes, and the most common ones are presented below. Outside the business environment, this unit of measure is also used to measure a student’s class load or involvement in a school project. You can also use an online calculator if you don’t want to manually calculate FTEs. Level up your career with the world's most recognized private equity investing program.

• Full Time Equivalent refers to the unit of measurement equivalent to an individual – worker or student – one unit of a work or school day, applicable in a variety of contexts.
• The full-time equivalent is one way of looking at your company's workforce and will allow you to measure the workload and work capacity of an employee over a year.
• By examining revenues instead of profits , you can judge profitability on an employee's actual work, not your other costs (ad costs, etc.).
• You can use FTE to analyze your operations and compare your business to industry standards.

Depending on what you’re using FTE for, it might help to perform a different FTE calculation. For example, there’s a simpler calculation for using FTE to work out salary. Can you accurately and easily make an FTE calculation for your workforce? Hearst Newspapers participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites.

Why the FTE calculation is important

Maybe your team needs extra help from temporary workers or new hires. Or perhaps some of your part-time employees can put in additional hours to pull the weight of a larger project. For part-time employees — Employees who worked less than 40 hours per week on average during a specific calculation period will have their average hours worked on a weekly fte meaning basis added together. Divide this total number by 40, and then round the total to the nearest tenth to get the total FTE. Full-time employees usually work 40 hours each week for over 120 days a year, but it also includes anyone who works more than 30 hours weekly. Add all of the hours from full-time workers together to use for your calculation.

• And some state and federal employment laws only apply to companies who meet a certain threshold of FTE employees.
• This way, you will be able to determine the number of full-time equivalent workers in your company even when you have part-time workers on-site.
• Additionally, FTE calculations give you a better sense of your current staffing levels so that you can plan and budget accordingly.
• If your company is a large account, there are other ways to help you save time and simplify this process.

This article was co-authored by Jill Newman, CPA and by wikiHow staff writer, Hunter Rising. Jill Newman is a Certified Public Accountant in Ohio with over 20 years of accounting experience. She has experience working as an accountant in public accounting firms, nonprofits, and educational institutions, and has also honed her communication skills via an MA in English, writing jobs, and as a teacher. She received her CPA from the Accountancy Board of Ohio in 1994 and has a BS in Business Administration/Accounting. All plans come with a free, 30-day trial of Toggl Track Premium—no credit card required. Toggl Track is the time tracker that can slot into any team's workflow.

Calculating your full-time equivalent workforce: what data to  take into account

In addition, if you're calculating FTE for ACA purposes, you'd only include the part-time person in your calculations if they worked 120 days or more per year. In our example, Jimmy and Marta would be considered part-time employees. You can then determine the equivalent number of full-time workers you employ.

She looks at KPIs likegross profit margin(should be over 50% before hiring) and cash accounts (should equal min. 3 months' revenue). For additional clarity, she researches industry averages to determine what Toggl Track can offer its employees. For example, you could use a 1.3 multiplier to cover taxes and benefits.