What is the difference between turnover and income?
turnover and revenue are two different concepts that include accounting information. First, the turnover represents how many times the company passes assets such as supplies or cash. Secondly, revenue is money that the company earns from consumers who buy goods and services of the company. However, they have a connection because companies can determine how much money they are going to generate to generate specific sales. Financial accounting ratios are primary tools to complete these measurements. For example, inventory turnover is the result of distributing the costs of goods sold by an average inventory. The picture says the company, how many times it is sold through its inventory balance. Sale through inventory several times a year generally suggests that the company has stable income, which usually leads to solid gross profit data. Turnover and revenue revenues have this first connection in the accouinformation of NTING.
Sales turnover is the second direct connection between turnover information and revenues specified in the accounting data. TurnoverSales are divided by cash income, with both information taken from the financial statements of the company. This accounting ratio says the company, how many times it burns its cash balance. In general, cash is necessary to purchase an inventory for sale and pay for any related expenditure in the operation of the company. Turnover and income usually have the closest relationship with this accounting ratio.
The company must carefully monitor its sales turnover ratio. If the company has stable sales revenues over several periods and a declining ratio of cash turnover, it is often a bad sign. In fact, information suggests that society must spend more money on generating the same income in every period. Comparison of the current ratios of turnover and revenue for the PREVOPRO assessment of the collected data is necessary. This is usually the only way the company can know whether the company becomes more or less profitable.
daThe accounting ratio can also play a role in the company's turnover and income ratio. The ratio of receivable turnover determines the collection period for reversing of receivables from sale to cash. The formula divides credit sales with average account receivables. The result describes in detail how many times the company collects outstanding receivables in the period. A company with a high income and low receivables accounts will usually be poor after some time.
Company must use the accounting conditions correctly. The results of the ratio themselves do not mean. Accountants must use these data as a comparison with previously calculated ratios or as a scale for industrial standard. This process is the only way to find out whether the company's turnover and income conditions allow them to assess operational efficiency.