Operating revenue: Operating revenue is the income that a business generates through its core operations and can include the sale of goods, products and services that the company provides. Other types of revenue bring money to a business. Net revenue represents the figure after doing adjustments such as discounts, returns and the cost of goods sold, while gross revenue is the total sales before adjustments. Businesses label revenue as either gross or net. The more revenue a business generates, the easier it is to ensure that the business is bringing in more money than it is spending. It is on the top of the line on an income statement, as it is the basis for other calculations such as gross income and net income. Revenue is the income a business generates through its primary operations. Related: Assets Vs Income: Definition And Differences (With Types) What Is Revenue? In comparison, turnover has three categories in terms of accounting and finance, which include inventory, assets and accounts receivable, each of which reflects the rate of each component generating income for the business.
Variety: There are two types of revenue, operating revenue and non-operating revenue, and each one generates income in different ways. Alternatively, turnover helps a business estimate its own productivity and efficiency and identify areas that need improvement. Significance: Revenue is significant, as it reviews how stable and profitable a business is, which is vital to establish credibility for the investors and increase eligibility to avail loans. But a company does list its revenue on its income statement since it typically needs that figure for other calculations. Turnover looks at the number of times a business uses an element that can generate income.įinancial reporting: Many businesses use turnover rates internally as an indicator of efficiency and performance, which is why a business may choose not to mention its turnover on its income statement. The following are key points that highlight the differences between revenue vs turnover:ĭefinition: Revenue measures the quantity of a product sold in a business in relation to its prices.
TURNOVER MEANING HOW TO
In this article, we discuss the key differences between revenue and turnover, explore each topic's definition and review how to calculate the two with the help of some examples. Understanding the differences between revenue and turnover can help you distinguish these values in an organisation. Since the two terms are similar, many businesses use them synonymously in some situations. In regard to a business, knowing the difference between revenue vs turnover is crucial, as people often use them interchangeably.
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