Sales turnover – What is sales turnover?
Sales turnover represents the value of goods and services provided to customers during a specified time period - usually one year.
Turnover minus direct costs is called gross profit. The gross profit then needs to cover all operating expenses, before any net profit may arise.
Sales doesn't always equal money received
The figure for sales turnover in the profit & loss account does not necessarily mean that the firm has received all of that amount. This is because although they may have sold that quantity and value of the product they may still be owed some of the money by their debtors.
Therefore, the figure for sales turnover in the P&L account represents the total amount of their product or service sold, not the actual amount of money they have received.