Turnover

Published Thursday 23 July 2026

Table of contents

• What is turnover?
• Turnover vs profit
• How to calculate turnover
• What counts as turnover (and what doesn't)
• Gross vs net turnover
• Why turnover matters for your business
• Reporting turnover
• What is annual turnover?
• Other types of turnover
• Track your turnover with Xero
• FAQs on turnover
• Related Terms
• Learn more about turnover

Key takeaways

• Turnover is another word for your sales revenue, the money your business takes in from selling goods or services over a set period.
• Turnover isn't profit; profit is what's left once you take your costs out of your turnover.
• To work out turnover, multiply the number of sales by the sale price, and measure it excluding GST.
• Turnover helps you track growth, benchmark your business, apply for funding, and work out when to register for GST.

What is turnover?

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

The word turnover is used more in Europe and Asia, while North Americans tend to say 'revenue' or 'sales'. You might also hear the term net turnover, which can refer to profit, so it's best to think of turnover as revenue to avoid confusion.

Turnover vs profit

Turnover and profit measure two different things, and it's easy to mix them up. Turnover is your total sales before any costs come out, while profit is what's left after you've paid your costs.

So a business with high turnover can still make little profit if its costs are high. Watching both numbers gives you a clearer picture of how your business is really doing.

How to calculate turnover

Working out your turnover is straightforward once you have your sales figures. The plain formula is turnover = number of sales x sale price.

Turnover example

A quick example shows how the formula works in practice. A business teaches 60 students per week at $50 per lesson, so its weekly turnover is $3,000 (60 x $50).

What counts as turnover (and what doesn't)

Turnover counts the money you make from normal sales of your goods or services, and it's measured excluding GST. Some other income sources look like sales but don't count, so it helps to know what's in and what's out.

• Counted: normal sales of your goods or services, including product sales, service fees, and commissions
• Not counted: interest earned on savings
• Not counted: subletting property or equipment, unless you're a rental business
• Not counted: selling business assets like vehicles, tools, or property
• Not counted: money received from investors or lenders

If you'd like a fuller explanation of how sales income is defined, see this guide to revenue.

Gross vs net turnover

You'll sometimes see turnover split into gross and net. Gross turnover is your total sales, while net turnover is your sales minus items like discounts and returns.

Why turnover matters for your business

Turnover is one of the clearest signals of how your business is performing. You'll use it for several practical reasons throughout the year.

• Tracking growth from one period to the next
• Benchmarking your business against previous years or competitors
• Applying for funding or business insurance
• Working out your GST obligations

In New Zealand you must register for GST once your turnover reaches $60,000 in any 12-month period, so keeping an eye on this number matters.

Reporting turnover

Once you've earned it, turnover needs to show up in your reporting. It's recorded on your profit and loss (P&L) statement under 'sales revenue'.

Keep in mind that credit sales won't show in your bank account until the customer pays, so your bank balance and your recorded turnover can differ.

What is annual turnover?

Annual turnover is one of the most common ways to view this figure. It's your sales revenue over a 12-month period, though you can measure turnover over any period that helps you understand how your business is performing.

Other types of turnover

Turnover doesn't only describe your sales. In business and accounting, a few other measures share the name.

• Staff or employee turnover: how often staff leave your business
• Inventory turnover: how often you sell and restock your stock
• Accounts receivable turnover: how quickly your customers pay

Track your turnover with Xero

Keeping tabs on your turnover is far easier when your sales data updates automatically. Xero's reporting brings your sales together in one place so you can see your turnover at a glance. See your sales revenue update in real time and get one month free.

FAQs on turnover

Here are answers to some frequently asked questions about turnover to clear up the common points of confusion.

Is turnover the same as revenue?

Yes, turnover and revenue both describe the money your business earns from sales. The word turnover is simply used more often in Europe and Asia.

Is turnover the same as profit?

No, turnover is your total sales before costs, while profit is what remains after costs. A business can have strong turnover and still make little profit.

Does turnover include GST?

No, turnover is measured excluding GST. You report your sales revenue as the amount before GST is added.

How do you calculate turnover?

Multiply the number of sales by the sale price to get your turnover for a period. For example, 60 lessons at $50 each gives a turnover of $3,000.

Related Terms

• Gross profit
• Net profit
• Gross profit vs net profit
• Net profit margin

Learn more about turnover

• Small business accounting
• How to measure profitability
• Gross profit margin formula