Facturación

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.

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What is sales turnover?

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. 

hat does the sales turnover ratio mean?

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.

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How to calculate sales turnover?

The steps to calculate sales turnover is as follows:

• Identify the sales period: To calculate the indicator, sales period is required to be identified from where the information can be gathered. Choose a complete sales period as getting accurate sales turnover rate during active sales period is difficult.

• Calculate cost of goods sold: Next step is to  identify the cost of items. The total sum of initial and additional inventory expenses. After this, subtract the total number of ending inventory from it. The final figure will be COGS.

COGS = (Starting inventory cost + extra inventory expenses) - ending inventory

• Identify average inventory: Determining average inventory is the next step, add the amount of starting and ending inventory together, then divide by 2 (Starting inventory + Ending Inventory) / 2 = Average inventory

• Analyze sales turnover ratio: To complete the calculations, divide the COGS by the number of average inventory which will lead to the value of sales turnover rate. 

The formula is: 

Sales turnover rate = COGS / Average inventory