Turnover

Published Friday 24 July 2026

Table of contents

• What is turnover?
• Turnover meaning in business
• How to calculate turnover
• Turnover vs profit
• What turnover does not include
• What is annual turnover?
• Reporting turnover in Hong Kong
• Other meanings of turnover
• Why tracking your turnover matters
• Keep on top of your turnover with Xero
• FAQs on turnover
• Related terms
• Learn more about turnover

Key takeaways

• Turnover is another word for sales revenue: the money your business takes in from selling goods or services over a set period.
• To find turnover, multiply the number of sales by the price of each sale.
• Turnover isn't the same as profit. Profit is what's left once you subtract your costs from turnover.
• Hong Kong has no VAT, GST, or sales tax, so your turnover isn't reduced by any sales tax.

What is turnover?

Turnover is another word for sales revenue. It's the money your business receives from selling goods or services over a period of time.

The word turnover is used more in Europe and Asia, while businesses in North America tend to say 'revenue' or 'sales'. They all point to the same thing: the total value of what you've sold before any costs come out.

Turnover meaning in business

In everyday terms, turnover shows how much trade your business is doing. When your turnover rises, you're bringing in more revenue from your sales.

It's a useful measure of size and activity, so lenders, investors, and business owners often look at it first. A higher figure doesn't automatically mean you're keeping more money, though, because turnover says nothing about your costs.

How to calculate turnover

Working out turnover is straightforward. In plain terms, the formula is turnover = number of sales × price of sales.

Add up every sale you make across your chosen period, and you have your turnover for that period.

Turnover example

Here's how the formula works in practice. Say you run a small tutoring business and teach 60 students each week, charging HK$50 per lesson.

Your weekly turnover is 60 × HK$50, which comes to HK$3,000. Over a four-week month, that same rate gives you HK$12,000 in turnover.

Turnover vs profit

Turnover and profit are easy to mix up, but they measure different things. Turnover is your total sales revenue, while profit is what's left after you take your costs away.

There are two common profit figures to know:

• Gross profit: your turnover minus the cost of goods sold
• Net profit: your gross profit minus all other operating expenses and taxes

You'll sometimes hear 'net turnover' used loosely to mean profit, which can cause confusion. To keep things clear, it's safest to treat turnover as revenue and use gross profit and net profit when you're talking about what you keep.

What turnover does not include

Turnover only covers income from your main trading activity. Some money that comes into your business sits outside your turnover figure, including:

• Interest earned on savings
• Income from subletting property or equipment, unless you're a rental business
• Money from selling business assets like vehicles, tools, or property
• Money received from investors or lenders

What is annual turnover?

Annual turnover is simply your sales revenue measured over a 12-month period. It's one of the most common ways to size up a business over a full year.

You can measure turnover over any period that suits you, such as a week, a month, or a quarter. A year just gives you a clear, comparable view for planning and reporting.

Reporting turnover in Hong Kong

Turnover is recorded on your profit and loss (P&L) statement under sales revenue. Unlike some countries, Hong Kong has no VAT, GST, or sales tax, so your turnover isn't reduced by any sales tax.

Keep in mind that credit sales count towards turnover when you make them, even though the money won't show in your bank until the customer pays. Accurate bookkeeping helps you match those two up.

Your turnover figures also matter beyond your own records. They feed into Hong Kong profits tax and count towards Business Registration purposes.

Other meanings of turnover

Turnover can describe more than sales. In other parts of your business, you might come across these measures:

• Staff turnover: how often employees leave and are replaced
• Inventory turnover: how often you sell and restock your goods
• Accounts receivable turnover: how quickly your customers pay you

Why tracking your turnover matters

Keeping an eye on turnover gives you a clear read on how your business is trading. It helps you when you're applying for funding and loans, benchmarking your growth over time, and reporting for tax.

Tracked alongside your costs, turnover also supports better decisions about pricing and profitability.

Keep on top of your turnover with Xero

Xero accounting software brings your sales into one place, so you can see your turnover update in real time as invoices are paid, and you can get one month free when you start.

FAQs on turnover

Here are answers to some frequently asked questions about turnover.

Is turnover the same as revenue?

Yes, turnover and revenue both mean the total sales your business makes over a period. The word turnover is more common in Hong Kong and the rest of Asia, while revenue is used more in North America.

Is turnover the same as profit?

No, turnover is your total sales before any costs, while profit is what's left after you subtract those costs. A business can have high turnover and still make little profit if its costs are high.

Does turnover include tax in Hong Kong?

Hong Kong has no VAT, GST, or sales tax, so your turnover isn't reduced by any sales tax. Your full sales value counts towards turnover.

How do you work out annual turnover?

Add up all your sales revenue across a 12-month period to get your annual turnover. You can use your financial year or any rolling 12 months that suits your reporting.

Related terms

• Profit
• Profitability
• Markup
• EBITDA
• Expense

Learn more about turnover

• How to increase revenue
• Small business accounting
• Bookkeeping and accounting
• How to record accounting transactions
• When to hire an accountant