Turnover

Published Thursday 23 July 2026

Table of contents

• Turnover meaning in business
• What turnover is not
• Turnover vs profit
• How to calculate turnover
• Why turnover matters for your business
• Reporting turnover
• What is annual turnover?
• Other meanings of turnover
• Track your turnover with Xero
• FAQs on turnover
• Related terms
• Learn more about turnover

Key takeaways

• Turnover is another word for the total sales revenue your business brings in over a set period, such as a week, a month, or a year.
• Turnover isn't the same as profit. Turnover is your total sales before costs, while profit is what's left once you subtract your expenses.
• You calculate turnover by adding up your total sales for a period, then deducting discounts, returns, and any sales taxes you collect for the government.
• Turnover can also describe how quickly you sell stock, collect customer payments, or replace staff, known as inventory, accounts receivable, and employee turnover.

Turnover meaning in business

Turnover is another word for sales revenue: the money your business receives from selling goods or services over a period. If your turnover goes up, it means you're bringing in more sales, and if it goes down, you're bringing in less.

The word turnover is used more often in Europe and Asia, while people in North America tend to say "revenue" or "sales". They all point to the same thing, so it can help to think of turnover as the money coming in from what you sell.

What turnover is not

Turnover counts only the money you make from your normal business sales. Money from other sources doesn't count toward it, including:

• interest earned on savings
• subletting property or equipment, unless you run a rental business
• selling business assets such as vehicles, tools, or property
• money received from investors or lenders

Turnover vs profit

Turnover and profit measure 2 different things. Turnover is your total sales before any costs are taken out, while profit is what's left once you subtract your expenses.

There are 2 common ways to measure profit. Gross profit is your turnover minus the direct costs of what you sell, and net profit is what remains after you also subtract operating costs, such as rent, wages, and taxes. If you want a closer look, see the difference between gross profit and net profit, or how to work out your gross profit margin.

How to calculate turnover

Working out your turnover is straightforward once you settle on a time frame. Follow these steps:

1. Choose the period you want to measure, such as a week, a month, or a year.
2. Add up the total sales of goods and services you made during that period.
3. Deduct any discounts, returns, and sales taxes you collect on behalf of the government.

Turnover example

A short example shows how the numbers come together. A business teaches 60 students per week at $50 per lesson, so its weekly turnover is $3000 (60 x $50).

Why turnover matters for your business

Turnover is one of the clearest signals of how your business is performing. Tracking it over time helps you spot trends and make plans with more confidence. Here's why it's worth keeping an eye on:

• shows whether your business is growing, holding steady, or slowing down
• helps you set sales targets and track your progress toward them
• lets you benchmark 1 period against another to compare performance
• feeds into your profit calculations as the starting figure
• is often needed for tax returns, loan or grant applications, and business valuations

Reporting turnover

Turnover appears on your income statement, recorded under "sales revenue". You can learn how this fits into your wider accounts in this guide to the financial statement.

Your business bank account may also reflect your turnover, though the timing can differ. Credit sales won't show up in the bank until your customer actually pays.

What is annual turnover?

Annual turnover is the sales revenue your business collects over a 12 month period. It's a common way to size up a year of trading at a glance.

You don't have to stick to a year, though. You can measure turnover over any period that helps you understand how the business is performing, and it's easier to spot when you know how to read your financial statements.

Other meanings of turnover

Turnover doesn't always refer to sales. In accounting and day-to-day business, the word describes a few other things:

• inventory turnover: how often you sell your stock and replace it over a period
• accounts receivable turnover: how quickly you collect payments from your customers
• employee turnover: how often staff leave your business and need to be replaced

Track your turnover with Xero

Keeping your sales and reports organized makes it far easier to see your turnover at any time. With online accounting software, you can record sales, track them across periods, and see how the money is coming in. Get a clear view of your numbers and get one month free.

FAQs on turnover

Here are answers to some frequently asked questions about turnover to clear up the details.

Is turnover the same as revenue?

Yes, turnover and revenue both describe the money your business earns from sales. The word turnover is simply more common in some regions than others.

Is turnover calculated before or after tax?

Turnover is measured before income tax, but you deduct any sales taxes you collect for the government, since that money isn't yours to keep. What's left is your true sales figure.

Is turnover the same as profit?

No. Turnover is your total sales, while profit is what remains after you subtract your costs from that turnover.

What does not count towards turnover?

Money that doesn't come from your regular sales is left out, such as interest on savings or funds from investors. Selling off a business asset like a vehicle also doesn't count.

Related terms

• Profit
• Gross profit
• Net profit
• Gross profit vs net profit
• Cash flow statement

Learn more about turnover

• Financial statements
• How to read financial statements
• Multi-step income statement
• What is gross profit margin
• Small business tax rates