What is the Difference Between Turnover and Profit?
🆚 Go to Comparative Table 🆚Turnover and profit are both measures of a company's revenue, but they calculate that income using different inputs. The main differences between turnover and profit are:
- Definition: Turnover, also called net sales, is the pure income from sales a company makes. Profit, on the other hand, is the total turnover remaining after the organization accounts for all expenses, both variable and fixed.
- Calculation: Turnover is the net sales generated by a business, while profit is the residual earnings of a business after all expenses have been charged against net sales.
- Purpose: Turnover generally looks at the speed and efficiency of a company's operations, while profit looks at how much money the company makes after expenses.
In summary, turnover represents the total sales revenue generated by a company, while profit represents the net income after accounting for all expenses. Both turnover and profit are essential for understanding a company's financial health and performance.
Comparative Table: Turnover vs Profit
Here is a table highlighting the key differences between turnover and profit:
| Feature | Turnover | Profit |
|---|---|---|
| Definition | Turnover is the net sales made by a company resulting from transactions done during a specific period. | Profit refers to a company's total revenues minus its expenses. |
| Calculation | Turnover is calculated by multiplying the volume of sales by the price of each unit. | Profit is calculated using the formula: Profit = Income - Expenses. |
| Purpose | Turnover represents the speed and efficiency of a company's operations. | Profit indicates the financial gain a company makes after all expenses are paid. |
| Financial Statement | Turnover is the first line of an income statement. | Profit is the last line of an income statement. |
Turnover and profit are both important financial metrics for a company, but they serve different purposes. Turnover focuses on the speed and efficiency of a company's operations, while profit represents the financial gain a company makes after all expenses are paid.
- Revenue vs Turnover
- Sales vs Turnover
- Profit vs Revenue
- Profit vs Profitability
- Cash vs Profit
- Surplus vs Profit
- Profit vs Gain
- Margin vs Profit
- Balance Sheet vs Profit vs Loss
- Net Income vs Net Profit
- Gross Profit vs Operating Profit
- Operating Profit vs Net Profit
- Net Profit vs Gross Profit
- Profitability vs Liquidity
- Earnings vs Revenue
- Accounting Profit vs Economic Profit
- Cost Center vs Profit Center
- Gross Profit vs Gross Margin
- Sales vs Revenue