What is Turnover? | Meaning & Definition | Akrivia HCM

Turnover is a financial ratio used to identify the efficiency of a business. It is commonly used in the retail and service industries but can also be applied to all companies. Turnover, or revenue, is calculated by taking all income generated within a set period and dividing by the average amount of stock in trade. The purpose of turnover measurement is to show how effectively your business has converted the income from sales into cash before other expenses (overheads) are deducted.

Define Turnover

Turnover is one of the valuable performance indicators that can help give you a good insight into how well your enterprise is performing. Turnover is the total value of your sales of goods and services over some time. Actual turnover would be the quantity sold times the price at which was sold it, less any discounts or allowances. To calculate turnover, you need to calculate the revenue first and then add on any tax or VAT charge and discounts.

How to calculate turnover?

Turnover rate is a metric that quantifies the amount of voluntary and involuntary employee terminations for a given period. The amount is calculated by dividing the total earnings during the period by an average number of employees at the beginning.

Is turnover considered revenue?

Turnover, a dissimilar turnover rate, refers to a company’s money over a defined period through its normal business activities. Yes, it is revenue. It is also called organization income or gross revenue, known as sales income. The opposite of turnover would be expenses, which are all costs incurred while providing goods and services.

How does turnover relate to sales?

Turnover is the total sales revenue collected over a defined period. It measures the amount of money that leaves the business from sales and can be calculated by various methods. Two of the most traditional methods include the single-step and two-step approaches. The two-step approach involves sales, cost of goods sold, and gross profit, whereas the single-step process involves sales, beginning inventory, purchases, and expenses for the ending list.

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