what actually mean turnover in business.


what actually mean turnover in business.

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Turnover is a measure of a business’s income or earnings in a specific time period (month, quarter, year, etc.). It is the total money earned by sales of goods and services but without deducting things like expenses or taxes (which is how you determine profit). Turnover is used in securing investors, valuing a company, or comparing earnings (say comparing Q1 2021 vs Q1 2022).

Another use of the term in business is employee turnover which is a measure of how many employees quit or leave the company over a certain time period.

It has different meanings depending on context, but similar meanings in each case:

1. How often workers quit and new workers are hired. A company with 10 people and on average one leaves each year has 10% turnover. A fast food restaurant that keep workers around 4 months on average before they quit/get fired would have 300% turnover. It’s a measure of stability/quality/happiness of workplace, on company’s end it can mean high recruiting/training costs if turnover is high.

2. Turnover can also apply to inventory and how fast inventory is sold and replaced by new inventory. A grocery store’s produce section will have very high turnover with new produce put out daily and produce that doesn’t sell within a few days being tossed as it goes bad. It might take 6 months to sell through a 12-pack case of some less popular BBQ sauce flavor.