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Sales Turnover

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.

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. 

What 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:

  1. Identify the sales period
  2. Calculate cost of goods sold
  3. Identify average inventory
  4. Analyze sales turnover ratio
  1. 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.
  2. 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
  1. 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
  1. 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

What is the cost of sales turnover?

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.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.


eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

  • Promoters
    Employees who have responded positively or agreed.
  • Detractors
    Employees who have reacted negatively or disagreed.
  • Passives
    Employees who have stayed neutral with their responses.

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