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Revenue vs Turnover | Top Differences You Must Know! - YouTube
Channel: WallStreetMojo
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hello everyone hi welcome to the channel
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this video revenue vs turnover watch
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that's given below I welcome you all for
this wonderful session on accounting but
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basically this is an accounting concept
that we are going to learn today and
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it's basically an income statement there
is the loop concept well what we are
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going to do today is we are going to
understand the difference between them
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with the help of the infographics both
revenue versus turnover what are the
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differences I mean the meaning affects
ratios they're important some of the
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examples the types how they are reported
and how exactly the formula works then
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we are going to learn some of the key
differences and finally head to our
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differences with thee with the final
conclusion on the scene well let's begin
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for today the topic revenue versus the
turnover well there is a very key
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difference there is a very key
difference between revenue versus
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turnover is that you know the revenue
refers to the income generated okay bye
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any business entity by selling their
goods or or by or by providing their
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services during the normal course of the
operation whereas no the turnover refers
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to the number of times the company earns
the revenue using the asset it has
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purchased or generated in the business
so what is revenue let me again so that
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it goes in the brain in in the much
better format
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turn over here so what is revenue the
key difference between revenue turnover
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is that the revenue refers to the income
that is generated by any business entity
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by selling its goods and by providing
the services this is your income what is
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your turnover turnover refers to the
were of times the company earns the revenue
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using the acid the number of times the
company earns the revenue with the help
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of the assets it has purchased or
generated in the business that is the
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difference between the revenue and the
turnover revenue and turnover are
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basically often used interchangeably in
many contexts so they also mean the same
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for example in assets and inventory a
turn over when they when they flow
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through a business entity or either by
sale of the assets or out leaving the
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useful lives so when these assets
generate income by sales it is termed as
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revenue and turn or can also refer to
the business activity that are not
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necessary are involved with the scenes
for example the employee turnover it
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doesn't mean that in this tutorial we'll
look revenue versus normally the much
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world detail format let's learn with the
help of the infographics here well we
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will start with the definition first
revenue revenue refers to the money that
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is earned by company by selling its
goods or services for a price to its
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customer so what is it goods or services
and here how many times the company
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makes the money or burns turnover
refers to how many times the company
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makes a burns through the assets as
simple as that second effect revenue
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revenue affects the profitability of the
company and turnover affects the
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efficiency of the company revenue is
what profitability and turnover is what
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the efficiency now the ratio the revenue
is used to calculate the profitability
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ratio like gross profit margin operating
profit margin right those are net profit
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margin turnover ratios are used widely
as inventory turnover ratio how fast it
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is moving okay asset turnover ratio
sales turn turnover accounts receivable
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and accounts payable ratio so it's its
movement of your accounts payable ratio
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accounts receivable ratio with your
turnover ratio here you invent a
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turnover ratio and so on and so forth so
it is basically you see there is a
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movement of receivables or probably
inventory or probably your payables and
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so on and so forth
so you understand now the meaning
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revenue is more focused on the
profitability side turnover is more
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focused on the usage of the assets and
whether you've burnt on whether you've
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earned as simple as that
revenue is
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the total value of the goods or service
that is sold by the business it is the
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total value of the goods or services
that is sold revenue buying and
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selling the goods whatever profits you
make that goes in your net profit or
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gross profit but when you talk about
turnover turnover is the income that the
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firm generates through trading of the
goods or services here sold here trading
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of the goods or services importance and
revenues the move is important to
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understand because it is the vital
factor that determines the very
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important growth of the company and
turnable it is important to manage the
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production levels and show that nothing
is left idle or probably just in time
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approach that you use for inventory and
as inventory for for an extended period
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of time so the word helps you to figure
out that very well example revenue is
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calculated as the total amount of the
computer sold multiplied by the price
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number of computers enterprise as simple
as that
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so that is going to be your revenue but
what is turn over turn means the total
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amount of the computer sold in year okay
now the types revenue can be of two
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types operating and non-operating
revenue operating means which is revenue
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that is coming from the day-to-day
business of that particular entity non
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operating are the one like you know
interest from your fixed deposits or any
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other income which is not based on the
main operating business for which it has
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been operated turnover may be of three
inventory cash labor from the ratio that
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we discussed here it seems now you have
an idea how does it report Jets reported
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it is mandatory to report and is the
first line item in the income statement
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you see revenue and there is other
income right you'd ever see turnover and
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it is not mandatory to report turnover but
it is instead calculated for
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understanding these statements better
formula
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revenue is calculated as the total sales
minus the total sales minus the returns
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revenues what whatever scenes you do
less the returns and few turnover
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formulas are cash turnover net sale
here by cash
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total asset turnover then it's basically
sale is average total assets fixed
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asset turnover that is fixed asset
divided by net fixed assets and so on
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and so forth turnover as many turnover
formulas so I hope by far now you have
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gotten an idea like what we are talking
about here so let me just quickly make a
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reject or churning off the topic here so
now the key difference is that we are
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going to learn here is that you know the
revenue basically represents the amount
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of the money that comes in needs by
selling of its goods or services okay to
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the customer on the other hand are now
refers to the number of times the
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company burns through the asset like
inventory cash in workers here revenue
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is considered as important because it
helps to understanding the strengths of
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the business okay
it is more on the strength part because
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that's the most important thing the
customer B is size and also the market
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share
it ended increase in the revenue is a
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sign of the stability in to showcase the
confidence of the business for a company
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to get a loan and capital or a credit it
is very important for them to have a
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stable revenues account receivable
turnover have like you know an inventory
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turnover at the most Eon and inventory
turnover ER and IT are the most
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important commonly use metric which
helps in determining the liquidity
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positions of the company revenues
mentioned as the sales on the income
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statement and is mentally for all the
public companies to report turnover on
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the other hand is not mandatory to
report as is calculated for
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understanding B these reported statement
better the revenue can be probably
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operating or non non operating okay and
revenues the revenue that is on from the
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regular business activity well known
operating revenues are the additional
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revenues that gets generated through the
other activities like rent a dividend
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revenue is calculated how the total
sales less any returns okay while here
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the turnover ratios are calculated like
cashton own that sells if I can
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total asset turnover that is net sales
divided by average total assets and
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fixed asset turnover and so on and so
forth the revenue basically affects the
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profitability of the company while
turnover affects the efficiency of the
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company or revenue for a computer
selling company can be determined by
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multiplying the number of units sold for
thee into the turnover and can be
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determined how many number of units that
have been sold here it's the total
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amount revenue is basically important to
understand because it helps in
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determining the growth okay and the
stability of the company on the other
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hand understanding the turnover is
important to manage the production level
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or write time just in time approach for
inventory and that is nothing but is
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left anything inventory that is left
idle or for an extended period of time
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so you need to make sure that your
things are in the right way well finally
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after all of these differences
discussions let me make my final
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conclusion than this particular topic
the difference between the revenue
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versus turnover is complex but very
essential for all the organization to
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survive the increasing and the
maximizing revenues is a vital aspect
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that all the organizations they strive
to achieve now comparing the revenues
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you're on your basis it helps them
determine which direction the company is
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heading into if there is any scope of
improvement or not that needs to be
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taken care for for determining the
turnover issues that are correctly been
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calculated or not it is very important
to have the benchmark set so determining
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the correct on our ratio mainly depends
on the nature of the industry and the
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business type although there is a
difference between revenue versus
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turnover both are very important
concepts to the business well that is it
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for now I thank everyone for joining the
session if you have learned and liked
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thank you everyone for once again for
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joining the session
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