Turnover is a financial metric that measures the total amount of money a business receives from the sale of goods and services over a specific period of time, usually a quarter or financial year. It is also known as income or gross revenue. Turnover is different from profit, which is a measure of earnings and is reached by subtracting total expenses from total sales.

Turnover can be used to understand how quickly a business conducts its operations. It can also help investors determine the level of risk they will face if providing operating capital to a company. For example, a company with a $5 million inventory that takes seven months to sell will be considered less profitable than a company with a $2 million inventory that is sold within two months.

In addition to financial turnover, there are other potential definitions of turnover that don’t refer directly to finances. For example, ‘turnover’ can also mean the number of employees that leave a business within a specific period, also sometimes known as the ‘employee churn rate’ . Or, if a business offers credit to customers or clients, it might also measure ‘accounts receivable turnover’ – the length of time it takes customers to pay.

Calculating turnover is straightforward as long as accurate records of sales are kept. Turnover can provide useful information about a business and its finances, such as its performance, planning, securing investment, and valuing the company if planning to sell.