What is the Difference Between Revenue and Turnover?
🆚 Go to Comparative Table 🆚The terms "revenue" and "turnover" are often used interchangeably, but they have different meanings and implications for a business. Here are the key differences between the two:
- Definition: Revenue refers to the money a company earns by selling its products or services for a price. Turnover, on the other hand, is the number of times a company earns revenue using the assets it has purchased.
- Meaning: Revenue is the income generated by a business entity through the sale of goods or services, while turnover refers to how many times a company makes or burns through assets.
- Effect on Business: Revenue affects a company's profitability, while turnover affects its efficiency.
- Types: There are different types of turnover, such as inventory turnover, employee turnover, and asset turnover. Revenue, however, is primarily generated through sales of goods or services.
- Calculation: Revenue is calculated by multiplying the number of goods or services sold by their respective prices. Turnover is calculated by dividing the total value of sales by the average value of assets.
- Reporting: Revenue is typically reported in the income statement, while turnover is reported in the balance sheet or other financial statements.
In summary, revenue represents the income generated by a company through sales, while turnover measures how efficiently a company uses its assets to generate revenue. Both are important for assessing a company's financial performance and profitability.
Comparative Table: Revenue vs Turnover
Here is a table that highlights the key differences between revenue and turnover:
| Feature | Revenue | Turnover |
|---|---|---|
| Definition | Revenue refers to the income generated by a business entity by selling its goods or services. | Turnover refers to the number of times a company earns revenue using the assets it has purchased. |
| Meaning | Revenue is the money companies earn by selling products or services for a price. | Turnover is the number of times a business or company burns through assets such as inventory, cash, and employees (workers). |
| Effect on Business | Revenue affects the profitability of the company. | Turnover affects the efficiency of the company. |
| Types | Revenue can be of two types – operating revenue and non-operating revenue. | Turnover may be of three types: Inventory, Cash, and Labor. |
| Reporting | It is mandatory to report revenue, and it is the first line item on the income statement. | It is not mandatory to report turnover, but it is calculated for understanding the statements. |
| Formula | Revenue is calculated as – Total Sales – Returns. | Turnover formulas include Cash turnover – Net Sales/Cash, Total asset turnover – Net Sales/Average Total Assets, and Fixed Asset turnover – Fixed Assets/Net Fixed Assets. |
In summary, revenue represents the money earned by a company through sales of goods or services, while turnover refers to the number of times a company goes through its assets to generate revenue. Revenue affects a company's profitability, whereas turnover affects its efficiency.
- Sales vs Turnover
- Turnover vs Profit
- Profit vs Revenue
- Income vs Revenue
- Sales vs Revenue
- Earnings vs Revenue
- Capital Expenditure vs Revenue Expenditure
- Profit vs Profitability
- Capital Budget vs Revenue Budget
- Fiscal Deficit vs Revenue Deficit
- Capital Reserves vs Revenue Reserves
- Operating Income vs Net Income
- Gross Profit vs Operating Profit
- Net Income vs Net Profit
- Net Profit vs Gross Profit
- Operating Profit vs Net Profit
- Balance Sheet vs Profit vs Loss
- EBITDA vs Operating Income
- Contribution Margin vs Gross Margin