Turnover is a term used in business and accounting to measure how quickly a company conducts its operations. It is an accounting concept that calculates how quickly a company collects cash from accounts receivable or how fast the company sells its inventory. Turnover is calculated over a specific period of time, usually a quarter or financial year. The most common forms of turnover include accounts receivable turnover, inventory turnover, portfolio turnover, and working capital turnover. Companies can better assess the efficiency of their operations by looking at a range of these ratios, often with the goal of maximizing turnover.
In business, turnover refers to the total amount of money a business receives from the sale of goods and services, minus discounts and VAT. The Companies Act 2006 defines turnover as the amounts derived from the provision of goods and services falling within the companys ordinary activities, after deduction of trade discounts, value-added tax, and any other taxes based on the amounts so derived. Turnover is an important financial figure to get to grips with, and it is usually calculated over a specific period of time, usually a quarter or financial year.
Turnover is different from revenue, which refers to the money companies earn by selling products or services for a price. Turnover is the number of times companies make or burn through assets and inventory. Revenue and turnover do often correlate, but they are not the same thing.
In summary, turnover is a measure of how quickly a company conducts its operations, while in business, it refers to the total amount of money a business receives from the sale of goods and services, minus discounts and VAT. Turnover is different from revenue, which refers to the money companies earn by selling products or services for a price.
