What is turnover?

Published Friday 24 July 2026

Table of contents

• What is turnover?
• Turnover meaning in business
• Turnover vs profit
• How to calculate turnover
• What counts as turnover (and what doesn’t)
• 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 sales revenue: the money your business makes from selling goods or services over a set period.
• Turnover isn’t profit. You pay your costs and expenses out of turnover before you arrive at a profit.
• To work out turnover, add up all your sales for the period. It excludes VAT you collect on behalf of SARS.
• Annual turnover is your sales revenue over a 12 month period, and it’s often used to gauge business size and growth.

What is turnover?

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

If your turnover increases, that’s the same as saying your revenue, or money from sales, has gone up. Turnover is used more often in Europe and Asia, while businesses in North America tend to say ‘revenue’ or ‘sales’.

Turnover meaning in business

In everyday business use, turnover is simply the money you receive from sales. When it rises, you’re bringing in more revenue. When it falls, you’re bringing in less.

Turnover isn’t your profit. You need to pay your production costs and general business expenses out of your turnover before you get to a profit. If you ever hear someone mention net turnover, they may be referring to profit, so it helps to think of turnover simply as revenue.

Turnover vs profit

Turnover and profit are easy to mix up, but they measure different things. Turnover is the total money coming in from sales, while profit is what’s left once you subtract your costs.

There are two profit figures to know. Gross profit is your turnover minus the cost of sales, which is what it costs you to produce or buy the goods and services you sell. Net profit is what remains after you subtract all your other expenses, such as rent, wages, interest and tax.

How to calculate turnover

To calculate turnover, add up the total value of the goods and services you sold over your chosen period, before deducting any costs. You can measure it over a week, a month, a quarter or a year.

Here’s a simple worked example. Say a tutoring business teaches 60 lessons a week at R500 per lesson. Its weekly turnover is 60 × R500 = R30,000.

What counts as turnover (and what doesn’t)

Turnover only counts the money you make from your normal business sales. This includes the following:

• Sales of your products or goods
• Fees you charge for your services

Some money that comes into your business isn’t turnover. The following sources sit outside it:

• Interest earned on savings
• Subletting property or equipment, unless you’re a rental business
• Selling business assets such as vehicles, tools or property
• Money received from investors or lenders
• VAT you collect on behalf of SARS, which you pass on rather than keep

Reporting turnover

Turnover appears at the top of your profit and loss statement, under the heading ‘sales revenue’. It gives you the starting figure you work down from to reach your profit.

The deposits in your business bank account might also reflect your turnover. Keep in mind that credit sales won’t show there until your customer has actually paid.

What is annual turnover?

Annual turnover is the sales revenue your business collects over a 12 month period. It’s a common measure of business size and a useful way to compare performance year on year.

You don’t have to stick to a calendar year. You can measure turnover over any period that makes sense for you or helps you understand how the business is tracking.

Other meanings of turnover

Outside of sales revenue, ‘turnover’ pops up in a few other places in business and accounting. Each one measures how quickly something moves through your business.

• Staff turnover: how often employees leave and are replaced
• Inventory turnover: how many times you sell and restock a product
• Accounts receivable turnover: how quickly you collect payments from customers

Track your turnover with Xero

Keeping an eye on turnover is far easier when your sales data updates in one place. Xero brings your income together and builds your profit and loss statement as you go, so you can see turnover at a glance and get one month free.

FAQs on turnover

Here are answers to frequently asked questions about turnover.

Is turnover the same as revenue?

Yes, turnover and revenue mean the same thing: the money your business makes from sales over a period. ‘Turnover’ is just the term used more widely in South Africa, Europe and Asia.

Does turnover include VAT?

No, turnover excludes the VAT you collect on behalf of SARS, because that money isn’t yours to keep. You report your sales value separately from the VAT you pass on.

What’s the difference between turnover and profit?

Turnover is your total sales income, while profit is what’s left after you subtract your costs. A business can have high turnover and still make little profit if its costs are high.

How do you work out annual turnover?

Add up the total value of everything you sold across the year, before any costs are taken off. Many businesses simply pull the sales revenue figure from their annual profit and loss statement.

What is inventory turnover?

Inventory turnover measures how many times you sell and replace your stock over a period. A higher figure usually means your products are selling quickly.

Related terms

• Profit
• Operating profit
• Gross profit
• Net profit
• Cash flow

Learn more about turnover

• Guide to financial statements
• Run financial reports
• Small business guides