What Is The Difference Between Turnover And Profit?

Turn over simply means the number of times at which a particular stock/item/good is being sold/turn over. It also refers to Net sales(sales less commission payable/discount allowed).

Profit simply means the difference in the cost price of a particular stock and the selling price of the particular stock.Profit= Sales - cost of sales. The cost of sales is determined thus- opening stock+(purchases+carriage inwards-returns awards) - closing stock. Profit is being divided into two categories, 1. Gross profit & 2. Net profit.

Gross profit is the common profit a layman considers he has made on a particular business but to an accountant the net profit is being regarded as the real profit which is being made in the business. Gross profit = Sales - Cost of sales, while Net profit= Gross Profit- other admin expenses incurred in the course of the business.

Gross Profit: It is the difference between revenue and cost of goods sold (COGS). If I sell a chocolate for $1 and I paid 30 cents for it (including marketing and purchasing cost etc) my gross profit would be 100 cent - 30 cent = 70 cents.

Turnover: It is how many times you trade a particular good or stock. Let say, I keep 100 dollars worth for chocolate stock. Every year I sell 1000 chocolates then my turnover would be 1000/100 = 10. Turnover is necessary to determine in order to know how much stock to keep on hand and when to finish the old stock.

Simply turnover=sales=cost+profit