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Net turnover is the net value of combined income over a given period of time or the “turnover” of an asset or other item valued over the same period. It is the net profit before VAT and post-trade discounts, and can also refer to services or inventory for a business. The word “net” distinguishes it from “gross” turnover, which is the turnover number before any taxes or discounts are applied. Turnover can also apply to employee loss and gain.
Net turnover is a general term that is used in business and accounting to refer to the net value of combined income over a given period of time or the “turnover” of an asset or other item valued over the same period. time. A technical definition for net turnover, from an accounting perspective, is net profit before value added tax (VAT) and post-trade discounts. Similar definitions govern the use of this variable in modern business and accounting.
In the most general sense, net revenue in accounting is the net profit of a business. This figure is often periodically marked in accounting systems. A slightly different definition, which again evaluates income, is the amount of income the business has earned on a class of asset or service. For example, a business’s net sales will be the number of times, during the year or other time periods, that the business delivered its value or “flipped”. This leads to turnover figures expressed as a percentage, where, for example, a $2000 worth asset that produces $3000 is said to “flip” 1.5 times.
Other definition of turnover refers to services or inventory for a business. Accountants can also evaluate how many times during a given period an “inventory” is “turned over”. While this still addresses value, it only addresses value relative to inventory volume, not assessing value strictly based on total income. For example, if inventory of ten widgets were replaced 1.5 times in a year, annual net sales would again be 1.5, after any applicable mitigations.
The word “net” in the term distinguishes this value from the “gross” turnover, which would be the turnover number before any taxes or discounts were applied. These two different terms give accountants the ability to show “true values” that business executives can understand and use in different ways. Net worth often provides the most “real” value because it takes into account multiple factors. Accountants could also clearly highlight the difference between gross sales and net sales to show how changing factors affect value.
Turnover, may also apply to employee loss and gain. Net value for turnover could also apply here, although commonly, staff turnover does not include gross or net valuations. In general, employee turnover also helps companies evaluate costs.
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