how overall turnover works
in the united states companies use revenue or sales to describe turnover if the overall inventory turnover for an american manufacturing company is 10 it means that the company as a whole generated 10 in revenues for every 1 of assets overall turnover in the north american context may also refer to certain metrics such as labor turnover or asset turnover for an organization as a whole as opposed to measuring them for a specific division or business unit in addition to tracking trends in the level and evolution of a company s overall turnover analysts bankers and investors also use net turnover overall turnover minus the costs of sales e g tax discounts and other costs figures in a number of financial ratio calculations to assess a company s health efficiency in using assets and generating profits and compare its performance relative to peers the usefulness of certain ratios varies by industry but some of the key ratios include asset and receivables turnover ratios and cash turnover ratios the asset turnover ratio divides a company s net turnover by its average level of assets during the year this is a profitability ratio that measures the company s ability to use its assets to generate sales receivables turnover is calculated by dividing net turnover by the company s average level of accounts receivables this measures how quickly a company collects payments from its customers cash turnover ratio compares a compares turnover to its working capital current assets minus current liabilities to gauge how well a company can finance its current operations turnover and financial reporting