![]() ![]() Turnover is one of the headline Key Performance Indicators (KPIs) which you will read about in financial news and in company financial statements. How does the definition of turnover relate to investing? how quickly does it run through or turn over that list of resources. These ratios calculate how frequently a business churns through its inventory or staff. These ratios use the word turnover more literally. Turnover is also a word linked to several accounting ratios, such as: “This journal entry increased total turnover in the general ledger.“ What else you should know about turnover? The definition of turnover is an accounting concept How is the word turnover used in a sentence? Royalty income from intellectual property, if this isn’t a core business activity.Interest received or accrued on loan notes receivable or bonds.Other examples of other income which isn’t usually reported within turnover: This way, the profits from this activity does not appear to enlarge the gross margin of the products the company sells. It may therefore be reported as ‘other operating income’ below the gross profit line. This property income will be trivial in the context of total turnover. Turnover sometimes excludes some ‘other income’ which is seen as ancillairy to the main trading activity of a business.įor example, a business which has invested in property or land around its factory site may receive some rental income from other tenants who presently occupy buildings which the business doesn’t yet have a use for. However, in a set of UK company accounts, you may see the total income referred to as ‘turnover’, although this figure goes by several other names, including the revenue (which is preferred by IFRS GAAP) and gross income.Ī high-level layout of the income statement (on which the turnover figure features) is as follows: You won’t necessarily see financial accounting books use the term ‘turnover’, as ‘revenue’ is a more internationally recognised term. Turnover is an accounting term used most commonly in the UK and refers to the total income of a business. Turnover is used interchangeably with revenue and gross income in the context of financial reporting. The Best Finance Books for Non-Financial Managersĭefinition of turnover (accounting): Income.The Best Merger & Acquisitions (M&A) Books.The Best Gold & Silver Investment Books.The Best Quantitative and Technical Analysis Books.The Best Internal & External Audit Books.The Best Financial Statement Analysis Books.The Best Financial Risk Management Books.The Best Financial & Management Accounting Books.The Best Fraud & Forensic Accounting Books.The Best Estate Planning & Inheritance Books.The Best Budgeting & Money Management Books.The Best Land & Forestry Investment Books.Compare UK Equity Crowdfunding Platforms.
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