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This article was co-written by Jill Newman, CPA. Jill Newman is a Certified Public Accountant (CPA) in Ohio with over 20 years of accounting experience. She received her CPA from the Ohio Board of Accountants in 1994 and holds a Bachelor of Business Administration/Accounting degree.
There are 10 references cited in this article that you can view at the bottom of the page.
This article has been viewed 14,236 times.
FTE, the abbreviation for Full-time equivalent, is the full-time equivalent, and this metric represents the number of hours of work completed by a full-time employee in a given period of time, such as like a month or a year. You can use the FTE number to convert the hours worked into the number of people needed to get the job done, to help simplify the planning process. FTE numbers also help budget analysts and project managers estimate labor costs. In addition, thanks to the FTE number, managers can also determine whether the cost of overtime is worth hiring new full-time or part-time employees.
Steps
Calculate FTE
- Multiply the total number of hours worked per week by the number of weeks worked by each part-time employee. Example :
- A part-time employee works 15 hours per week and for 30 weeks: 1 x 15 x 30 = 450 hours
- Two part-timers working 20 hours/week and for 40 weeks: 2 x 20 x 40 = 1600 hours
- Add up the results to get the total number of hours worked by part-timers.
- Example : 450 + 1600 = 2,050 hours of part-time work
- Multiply the number of workers by 40 (8 hours a day x 5 days a week).
- Example : there are 6 full-time employees: 6 x 40 = 240 hours
- Multiply this result by 52 (the number of weeks in a year).
- Example : 240 x 52 = 12,480 full-time hours
- Example : 12,480 (full-time hours) + 1,600 (part-time hours) = 14,080 total hours worked
- Holidays and other forms of paid leave (sick leave, maternity leave, etc.) are included in the hours worked. So you don’t need to do any special calculations for these hours.
- Divide the total hours by 2,080. 2,080 is the fixed number obtained from the following equation: 8 hours of the day x 5 days of the week x 52 weeks of the year. This final step will help you calculate your annual FTE number. [5] X Trusted Source Internal Revenue Service Go to Source
- Example : 14,080 (total working hours) ÷2080 = 6,769 FTEs
- Divide the total number of hours worked by 173.33 to calculate the FTE per month.
- Example : 4,000 (working hours in February) ÷ 173.33 = 23.07 FTEs
- Divide the total number of hours worked by 8 to calculate the FTE per day.
- Example : 80 working hours daily 8 = 10 FTEs
Use an online FTE calculator
Use professional FTE calculation method
- If you hire an accountant, you’ll need to provide enough important information about your business so that the accountant has all the information needed to calculate the FTE.
- Accountants also need access to employee documents, previous tax documents, and other similar types of documents.
- If your business employs part-time employees, you should convert part-time hours into full-time equivalents.
- You can also use FTE to compare population with income or square feet (US-UK unit of measurement), which is useful for making budgeting decisions. and hire/fire.
Advice
- The FTE does not specify the number of employees. The value of an FTE will remain the same over time, except when the company revises its usual staffing model.
This article was co-written by Jill Newman, CPA. Jill Newman is a Certified Public Accountant (CPA) in Ohio with over 20 years of accounting experience. She received her CPA from the Ohio Board of Accountants in 1994 and holds a Bachelor of Business Administration/Accounting degree.
There are 10 references cited in this article that you can view at the bottom of the page.
This article has been viewed 14,236 times.
FTE, the abbreviation for Full-time equivalent, is the full-time equivalent, and this metric represents the number of hours of work completed by a full-time employee in a given period of time, such as term like a month or a year. You can use the FTE number to convert the hours worked into the number of people needed to get the job done, to help simplify the planning process. FTE numbers also help budget analysts and project managers estimate labor costs. In addition, thanks to the FTE number, managers can also determine whether the cost of overtime is worth hiring new full-time or part-time employees.
In conclusion, calculating FTE (full-time equivalent) is an important aspect of workforce management and financial planning for organizations. By determining the number of full-time equivalent employees, companies can accurately assess their labor costs, understand their staffing needs, evaluate productivity levels, and comply with legal requirements. Whether it is for budgeting, performance analysis, or compliance purposes, the calculation of FTE provides valuable insights into the workforce. While there are various methods to calculate FTE, it is crucial to consider the industry standards, organizational needs, and specific requirements for accuracy and effective decision-making. Thus, mastering the skill of calculating FTE is essential for HR professionals, managers, and financial analysts in today’s competitive business environment.
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