Turnover as revenue
In the UK, Nigeria, South Africa, India and other Commonwealth countries, turnover commonly means a company's total sales, the same as [revenue](/glossary/revenue). Tax thresholds often use turnover, for example the turnover above which a business must register for [VAT](/glossary/value-added-tax-vat) or qualifies as a small company.
Turnover = Total sales of goods and services − Returns, discounts and sales taxes
Turnover ratios
In ratio analysis, turnover measures efficiency:
- [Inventory turnover](/glossary/inventory-turnover) = Cost of goods sold ÷ Average inventory
- [Accounts receivable turnover](/glossary/accounts-receivable-turnover) = Credit sales ÷ Average receivables
- Accounts payable turnover = Purchases ÷ Average payables
- Asset turnover = Revenue ÷ Average total assets
Higher turnover usually means assets are being used more efficiently.
Employee turnover
Staff turnover is the rate at which employees leave and are replaced:
Employee turnover rate = Leavers ÷ Average headcount × 100
High staff turnover raises recruitment and training costs.
Turnover vs profit
Turnover measures volume of sales, not profitability. A business with high turnover can still make a loss if costs are too high.