.svg)
Glossary Terms
Compass - The Only Sales Glossary You Need
Sales turnover, also referred as sales revenue turnover which is the amount of products or services sold within an accounting year. It is the value of total sales provided to the customers during an accounting year.
Sales turnover is the total sales generated by a business with a specific period of time (mainly a financial year). These financial metrics measure the amount of revenue generated from the services with a time frame. The sales turnover figure is reported on the income statement of profit or loss statement of the businesses financial statements.
The sales turnover ratio, also referred to as inventory turnover ratio, measures effectiveness of a business that manages its inventory by calculating and analyzing the number of times inventory is sold and replaced.
The steps to calculate sales turnover is as follows:
COGS = (Starting inventory cost + extra inventory expenses) - ending inventory
The formula is:
Sales turnover rate = COGS / Average inventory
The cost of sales turnover refers to the financial impact incurred by a company as a result of employee turnover within its sales department.
Sales turnover encompasses various expenses associated with replacing and training new sales employees, such as recruitment costs, onboarding expenses, training programs, productivity loss during the transition period, and potential revenue loss due to inexperienced or inefficient sales staff. The cost of sales turnover can significantly impact a company's profitability and overall sales performance, making it crucial for organizations to implement effective retention strategies and foster a positive work environment to reduce turnover and associated costs.
