What do you mean by the term turnover

Question

What do you mean by the term turnover?

Answer 1

The term "Turnover" has numerous meanings.

For a trader or manufacturer or service provider it means net sales (i.e., cash + credit).

While whenever a bank gives a loan to any person or company they observe the turnover.

Here the turnover usually refers to the net credits in any specified period in account holder’s account.

Whereas banks own turnover is the net loans disbursed + outstanding recovery of former period - bad debts (that is, loans written off) in this period.

Considering disclosure norms in the Accounting Standards the announcement of turnover is needed. I am not sure for which industries this is mandatory and for which industries this is not.

However it is nonetheless announced.

Balance sheet of some company can be simply window dressed. Therefore to understand whether whatever gains are illustrated are actually from turnover or not the announcement of turnover becomes essential.

In case when a person or investor finds out that the turnover of some company is not high however the company is saying that they encompass big gains then he can explore in details as to how the company is making its currency.

In case when the investor finds out that the company is selling the goods to a vast quantity although not making much gain then he can examine the books of accounts to find out what are the reasons of low profitability.