Turnover is another word for sales revenue. It’s the money a business receives from selling goods or services over a certain period.
If your turnover increases, that’s the same as saying your revenue (or money from sales) has increased. Turnover is more frequently used in Europe and Asia, while North Americans tend to stick to ‘revenue’ or ‘sales’.
Turnover is the money received from sales. When it goes up, it means you’re bringing in more revenue. When it goes down, you’re bringing in less.
Turnover is not your profit, however. You need to pay your production costs and general business expenses out of your turnover before arriving at a profit. The only exception is if you hear someone talk about net turnover. They may be referring to profit. To avoid confusion, it’s a good idea to think of turnover as revenue.
Turnover only counts money made from normal business sales and not other sources, such as:
Turnover = Number of sales x Price of sales
Turnover is recorded on your profit and loss (P&L) statement, under the section ‘sales revenue’. Deposits in your business bank account might also reflect your turnover, but be aware that credit sales won’t show here until your customer has paid.
Annual turnover is sales revenue collected over a 12 month period. You can calculate your turnover over any period that makes sense or helps you understand how the business is performing.
Turnover can also refer to: