What is Financial Turnover? (with photo)

Companies sometimes use financial turnover in reference to how assets such as stocks and other securities held as investments are managed.

“Financial turnover” is a term used in two different ways in the business world. A common usage has to do with the amount of turnover generated within a specified period of time in relation to the profits generated in that same period. A slightly different form of financial turnover has to do with the relationship between sales generated during a given period and the impact of those sales on finished goods inventory. With both apps, the basic idea behind financial turnover is to determine how efficiently some type of asset is being used to generate a desirable level of return.

Financial turnover assessment often focuses on determining whether the efforts used to produce a particular outcome are actually yielding sufficient benefits to make the effort worthwhile. For example, if the focus is on the relationship between the amount of finished goods produced during a given period versus the total amount of sales made during the same period, the desire is for high turnover to occur and generate a significant amount of money for the company. . A high financial turnover in this scenario would mean that a large part of the generated inventory would be sold to customers in the period under consideration, a situation that would be considered very desirable. With a low financial turnover, sales would fall far short of production, resulting in a larger inventory at the end of the period,

As with other types of billing, companies want to find the right balance between utilizing their resources and generating revenue which in turn translates into a decent level of profit. For this, the analysis of the financial turnover from one period to the other can allow adjusting production, as well as sales and marketing efforts so that the company produces enough products to meet consumer demand, but not to the point of finishing the goods. remain in deposits for months. Since demand for many goods and services can change due to factors such as seasonality, competition, or even changes in the general economy that affect how consumers spend their money, assessing financial turnover on a reasonably regular basis is an excellent idea.

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Companies sometimes use financial turnover in reference to how assets such as stocks and other securities held as investments are managed. In this scenario, the idea is to measure the turnover level of the portfolio’s assets from one period to the next, which is necessary to achieve the goals established for the return obtained by these investments. Depending on the nature of the investments involved, the replacement of some assets with others may be necessary to increase the portfolio. Other times, very little turnover is required if all the assets involved are operating at acceptable levels.

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