How to Calculate Turnover?
An expression specific to the entrepreneurial world and which describes the success (or not) of a company. Anyone who has a project must evaluate it beforehand to check the feasibility of its creation. Once the company is physically created, it is imperative that the turnover is positive. Conditions that weigh heavily on the shoulders of the contractor!
What Is Turnover?
The turnover or CA is an accounting indicator proving the smooth running of the company. It is the sum of products sold (in the case of a business, for example) or services to people outside the company (customers).
Depending on the type of activity, it can be calculated excluding taxes (HT), but if the company is subject to VAT (Value Added Tax), we then speak of a turnover with all charges included (TTC).
The formula to apply to calculate it is simple: multiply the number of sales by the selling price.
Why Should It Be Determined?
A business manager may want to calculate it every month or, on the contrary, only be interested in it at the end of the year. However, determining it regularly can be interesting, in order to analyze the performance of the company.
The turnover achieved can also be used as an indicator of comparison with competing companies, to see if the activity has a sufficient number of market shares to continue to be sustainable.
When selling products, certain periods are more conducive than others to achieve a good turnover (holiday periods, sales, special events such as Valentine's Day, etc.). However, it can happen on the contrary that the turnover stagnates. An explanation must be found for this situation. Simple calculation is no longer enough, we must move on to pure analysis.
Professionals: Why Go Through An Accountant To Calculate The Turnover?
If the formula for calculating turnover is quite simple, finding explanations for its stagnation or the fact that it is very low is a matter of expertise. However, absorbed by their daily tasks, business leaders have little time to devote to them. A chartered accountant, to whom the business manager may already delegate the establishment of the payslips of his employees, is for this, very good advice.
This professional knows that a company's income can fluctuate widely over the months without this being alarming. But it can also be a cash flow problem.
The chartered accountant can look into the EBITDA (Gross Operating Surplus); acronym that many business leaders neglect, to carry out a detailed analysis of the activity.
At the end of this audit, he will be able to paint a true picture of the company. With all the figures, he will be able to highlight the positive aspects; which make it possible to have a good turnover, but also the weaknesses in the operating cycle, for example, which explain a failing turnover.
Pointing out these elements would be useless if suggestions for improvement were not given. The accounting firm, experienced in the problems of all structures; from small businesses to multinationals; can help the entrepreneur to increase his turnover by providing regular support to the structure.