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Revenue VS Turnover - Does it even matter?

In Singapore, when applying for business loan, what does banks and lenders look for?

You may or may not have a certified CPA to help you with your accounts, but as the owner your business, you might have to understand the basis of everything.

As the saying goes, being a small business owner, you should "bao ga liao", aka incharge of everything!

So let's not rack our brains to go into details, we simplify it for you.

Revenue and Turnover are often used in many contexts when assessing a company, they also mean the same. Assets and inventory are turned over when they flow through a business either by the sale of assets. When these assets generate income through sales it is termed as a revenue. Turnover can also refer to business activities that not necessarily are involved with sales related as such.

Revenue means the amount of money a company makes by selling its goods or services to the customers. Turnover means the number of times a company burns through assets like inventory, cash, and workers.

Revenue is important because it helps in understanding the strength of the business, the

customer base, size and also the market share. Increase in revenues yearly is a sign of stability and confidence in the business. For a company to get loans it is important for them to have stable regular revenues. Accounts receivable is the most commonly used underwriting which help in determining the positioning strength of the company.

Revenue is stated as sales on the income statement and is mandatory for all the companies to report. Turnover is not mandatory to report and is calculated for understanding these reported statements better.

Revenue affects the profitability of the company while turnover affects the efficiency of the company.

Revenue is important as it helps in determining the growth and the sustainability of the

company, and by understanding the turnover is important, to manage productivity levels and ensure that nothing is left idle for a long period of time.

The difference between Revenue vs Turnover may be very complex which only the mind of a finance guy may be able to derive, but very important knowledge for all the business to survive.

Increasing revenues is an important aspect that all the businesses strive to achieve. Comparing revenue year after year helps them determine which direction the company is heading into and if there is any room of improvement.

For knowing if the turnover ratios are correctly calculated or not it is important to have a benchmark set. Determining the correct turnover ratios mainly depends on the nature of the industry and the business type.

Therefore both Revenue and Turnover are very important concept in determining the strength of a business.

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