Differentiate between turnover and profit.

The major differences between turnover and profit are as follows −

Turnover

• Total amount of cash received from sales by a company in certain period.
• Also called as revenue, sales, topline.
• Turnover is the multiplication of unit selling price to number of units sold.
• It is the superior one and is independent of profits.
• Turnover/revenues from operations, Non-operating turnover/revenues are types of turnover.
• Present at top in income statement.
• Determines demands in market for products/services of a company.

Profit

• Cash available after accommodating costs like administration costs, depreciation, taxes etc.
• Also called as net income, net profits, profit after tax, bottom line.
• Profit is difference between turnover and costs.
• Product of turnover.
• Depends on turnover.
• Gross profits, net profits are types of profit.
• Present at bottom of income statement.
• Determines if company can sell its products/service to cover its expenses charged against turnover.

Mandalika

Published on 25-Sep-2020 13:54:53

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