Turnover

Turnover is the gross quantity of revenues generated by selling products or services. The scale of business activity is determined by the profits or losses. The turnover is recorded in the accounts is on the credit side of the current account. It can be expressed as the amount without tax or after tax.

It is a measure of the scale of business activity and is used to determine the financial performance of the company. It can be expressed as the total revenue before taxes (gross turnover) or after taxes (net turnover).

Turnover can be calculated by multiplying the number of units sold by the price of each unit. It can also be calculated by adding up all the invoices or sales receipts for a specific period of time. This can be done on a monthly, quarterly or annual basis.

Turnover is an important metric for businesses as it is used to evaluate the company's performance, identify trends, and make decisions about future operations. For example, a company with a high turnover may be considered to be successful and growing, while a company with a low turnover may be struggling financially.

It is also important to note that high turnover rate can be a problem for companies as it could indicate that the company is not retaining its customers or employees, which could lead to additional costs of hiring and training new ones, and also a lack of experience and knowledge in the company.

Additionally, turnover can also be used in comparison with other companies in the same industry or sector, which can help businesses to understand how they are performing in relation to their competitors.

Turnover — recommended articles

Gross margin in retail industry — Contribution margin ratio — Return on sales — Cost-income ratio — Operating earnings — Contribution to sales ratio — Combined Ratio — Cost per unit — Segment margin

References

• Hilton, R. W. (1991). Managerial accounting. New York: McGraw-Hill.
• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2003). Managerial accounting. New York: McGraw-Hill/Irwin.
• Wilson, R. M. S., & Chua, W. F. (1993). Managerial accounting: method and meaning (Vol. 2). London: Chapman & Hall.