Overall Turnover

What Is Overall Turnover?

Overall turnover is an equivalent word for a company's total revenues. A term is most commonly utilized in Europe and Asia. For instance, an European or Asian company's press release that declares overall turnover increased 20% last year basically means that gross revenues or total sales increased by that percentage.

How Overall Turnover Works

In the United States, companies use revenue or sales to depict turnover. Assuming the overall inventory turnover for an American manufacturing company is 10, it means that the company as a whole created $10 in revenues for each $1 of assets.

Overall turnover, in the North American setting, may likewise allude to certain metrics, for example, labor turnover or asset turnover for an organization as a whole, rather than measuring them for a specific division or business unit.

Turnover Ratios

As well as tracking trends in the level and development of a company's overall turnover, analysts, bankers and investors likewise utilize net turnover (overall turnover minus the costs of sales — e.g., tax, discounts, and different costs) figures in a number of financial ratio estimations to survey a company's wellbeing, productivity in utilizing assets and generating profits, and compare its performance relative to peers.

The value of certain ratios fluctuates by industry, however a portion of the key ratios incorporate asset and receivables turnover ratios and cash turnover ratios. The asset turnover ratio separates a company's net turnover by its average level of assets during the year. This is a profitability ratio that measures the company's ability to utilize its assets to create sales.

Receivables turnover is calculated by partitioning net turnover by the company's average level of accounts receivables. This measures how rapidly a company gathers payments from its customers. Cash turnover ratio compares a compares turnover to its working capital (current assets minus current liabilities) to check how well a company can finance its current operations.

Turnover and Financial Reporting

How companies report their turnover figures and that they are so dependable to investors and analysts is routinely discussed. The vast majority of the worries connect with when and how revenue is recognized and reported.

The Financial Accounting Standards Board (FASB) and its European partner the International Accounting Standards Board (IASB) issued new revenue recognition standards for tending to how companies account for revenue/turnover from contracts. The changes are intended to make it simpler to compare revenue figures reported on financial statements across companies. The standard happen in 2018.

Features

• The term is most commonly utilized in Europe and Asia, while the utilization of the terms revenues or sales is more normal in the United States.
• Turnover ratios are utilized by financial analysts to comprehend a company's productivity and profitability in light of data found in financial statements.
• Overall turnover is equivalent to a company's total revenues over some period of time.