What is turnover in business?
In a business context, turnover refers to the total income or sales revenue generated by a company from its core operating activities over a specific period — typically a financial year. It represents the gross value of goods sold or services rendered before any costs or expenses are deducted. Turnover is often recorded as the first line of a profit and loss (P&L) statement and is also commonly called gross revenue or total sales.
Turnover is not the same as profit. Profit is what remains after all costs — including cost of goods sold, operating expenses, and taxes — are subtracted from turnover. A business may have high turnover but low profit if its costs are disproportionately high.
Types of turnover
The term “turnover” can also refer to other business metrics depending on context:
- Sales turnover: The most common meaning — total revenue from selling goods or services
- Inventory turnover: A measure of how quickly a business sells and replaces its stock. Calculated as COGS ÷ average inventory
- Employee (staff) turnover: The rate at which employees leave and are replaced, expressed as a percentage
- Accounts receivable turnover: How efficiently a business collects payment from customers who bought on credit
Turnover and the ATO
The ATO uses annual turnover to determine eligibility for various concessions and tax thresholds. For example, businesses with a GST turnover of $75,000 or more must register for GST, while small business concessions may apply to entities with an aggregated turnover below $10 million. Annual turnover only includes ordinary income earned in the course of carrying on a business — not income from asset sales or investments.