Revenue vs Turnover

The key difference between Revenue vs Turnover is that Revenue refers to the income generated by any business entity by selling their goods or by providing their services during the normal course of its operations, whereas, Turnover refers to the number of times the company earns revenue using the assets it has purchased or generated in the business.

Difference Between Revenue vs Turnover

Revenue and Turnover are often used interchangeably, and in many contexts, they also mean the same. For example, assets and inventory are turned over when they flow through a business either by the sale of assets or outliving their useful lives. When these assets generate income by sales, it is termed as revenue. Turnover can also refer to business activities that are not necessarily involved with sales, for example, employee turnover.

You are free to use this image on your website, templates etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Revenue vs Turnover (wallstreetmojo.com)

In this article, we look at Revenue vs. Turnover in detail.

Revenue vs. Turnover Infographics

Here are the top 9 differences between Revenue vs. Turnover

You are free to use this image on your website, templates etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Revenue vs Turnover (wallstreetmojo.com)

Revenue vs. Turnover Key Differences

The critical differences between Revenue vs. Turnover are as follows –

Revenue vs. Turnover Head to Head Differences

Now, let’s have a look at the head to head differences between Revenue vs. Turnover.

Basis of Revenue vs. TurnoverRevenueTurnover
Definition Revenue refers to the money that a company earns by selling goods and services for a price to its customers.Turnover refers to how many times a company makes or burns through assets.
EffectRevenue affects the profitability of the company.Turnover affects the efficiency of the company.
RatiosRevenue is used to calculate profitability ratiosProfitability RatiosProfitability ratios help in evaluating the ability of a company to generate income against the expenses. These ratios represent the financial viability of the company in various terms.read more like gross profit, net profit, and operating profit margin.Turnover ratios that are used widely are inventory turnover ratioInventory Turnover Ratio is a measure to determine the efficiency of a Company concerning its overall inventory management. To calculate the ratio, divide the cost of goods sold by the gross inventory. read moreInventory Turnover Ratio is a measure to determine the efficiency of a Company concerning its overall inventory management. To calculate the ratio, divide the cost of goods sold by the gross inventory. read more, asset turnover ratio, sales turnover, accounts receivable, and accounts payable ratio.
MeaningRevenue is the total value of goods or services sold by the business.Turnover is the income that a firm generates through trading goods and services.
ImportanceRevenue is critical to understand, as it is one of the vital factors that determine the growth of the company.Understanding the turnover is vital to manage production levels and ensure that nothing is left idle as inventory for an extended period.
Example Revenue is calculated as the total amount of computers sold multiplied by the price.Turnover means the total amount of computers sold in a year.
TypesRevenue can be of two types – operating revenue and non-operating revenue.Turnover may be of three types Inventory, Cash, and Labor.
ReportingIt is mandatory to report Revenue and is the first line item on the income statement.It is not mandatory to report turnover but is instead calculated for understanding the statements better.
FormulaRevenue is calculated as –
Total Sales – Returns
Few Turnover formulas are as below –
Cash turnover – Net Sales/Cash
Total asset turnover – Net Sales/Average Total Assets
Fixed Asset turnover – Fixed Assets/Net Fixed Assets

Conclusion

The difference between Revenue vs. Turnover is complex but very essential for all the organizations to survive. Increasing and maximizing revenuesMaximizing RevenuesRevenue maximization is the method of maximizing a company's sales by employing methods such as advertising, sales promotion, demos and test samples, campaigns, references. It aims to capture a larger market share in an industry. Technically, revenue is maximized when MR (Marginal Revenue) equals zero.read more is a vital aspect that all organizations strive to achieve. Comparing revenue year on year helps them determine which direction the company is heading into and if there is any scope of improvement. For determining the turnover ratios are correctly calculated, or no, it is essential to have a benchmark set. Determining the correct turnover ratios mainly depends on the nature of the industry and the business type. Although there is a difference between revenue vs. turnover, both are essential concepts to business.

Revenue vs. Turnover Video

 

This article has been a guide to Revenue vs. Turnover. Here we discuss the top 9 differences between Revenue and Turnover along with infographics and comparison table. You may also have a look at the following articles –

Reader Interactions

Leave a Reply

Your email address will not be published. Required fields are marked *