Turnover is the total revenue a business generates from its sales over a given period, measured before any costs, expenses or deductions are taken off.
What it means
It's the top-line figure income statements build down from - cost of sales is deducted to reach gross profit, and operating expenses further reduce that to net profit. Turnover alone says nothing about profitability.
Where it fits in
Several statutory thresholds are set against turnover rather than profit - the compulsory VAT registration threshold, the turnover tax eligibility ceiling, and B-BBEE affidavit eligibility all key off this figure, making it a number businesses track closely for compliance, not just performance.
Key rules
- Total sales revenue before any costs or deductions.
- The starting line of the income statement, before cost of sales.
- Distinct from profit - high turnover doesn't guarantee profitability.
- Several statutory thresholds (VAT registration, turnover tax) are set against it.
