Business, Legal & Accounting Glossary

Definition: Turnover


Quick Summary of Turnover

The sales of a business or other form of revenue from operations of the business. For mutual funds, a measure of trading activity during the previous year, expressed as a percentage of the average total assets of the fund. A turnover rate of 25% means that the value of trades represented one-fourth of the assets of the fund. For finance, the number of times a given asset, such as inventory, is during the accounting period, usually a year. For corporate finance, the ratio of annual sales to net worth, representing the extent to which a company can grow without outside capital. For markets, the volume of shares traded as a percent of total shares listed during a specified period, usually a day or a year. For Great Britain, total revenue. Percentage of the total number of shares outstanding of an issue that trades during any given period.

What is the dictionary definition of Turnover?

Dictionary Definition

  1. The total sales figure of an organisation for a stated period.
  2. The rate at which some asset is sold and replaced by one of the same class.
  3. The total value of the transactions on a market or stock exchange within a specified period.


  1. The act or result of overturning something; an upset.
  2. The amount of money taken as sales transacted in a calendar year.
  3. The number of times that stock is replaced after being used or sold, a worker is replaced after leaving, or property changes hands.

Full Definition of Turnover

In equity investing, portfolio turnover is another name for portfolio trading. Passively managed portfolios have little or no turnover. Actively managed portfolios, by design, have turnover.

The turnover rate is a measure of portfolio turnover. It is calculated over a given period as the lesser of stock purchases or stock sales, divided by the portfolio’s average market value during the period:


Turnover rate is typically reported on an annual basis. By construction, [1] is intended to exclude stock purchases or sales arising from new investments in, or withdrawals from, the portfolio over the specified period.

Because trading generates transaction costs, turnover is a drag on a portfolio’s performance. Actively managed mutual funds typically have annual turnover rates between 75% and 125%. More aggressive funds, including equity hedge funds, may have annual turnover rates of several hundred percent.

The notions of portfolio turnover and turnover rate can be extended to portfolios holding instruments other than equities, but some short-term instruments and cash-settled derivatives can be problematic. For example, a cash-settled forward will have no purchase or sale price to enter into the formula [1]. As another example, a money market fund might purchase short-term cash instruments throughout the year, holding each until maturity. Because it never sells any of the instruments, its turnover rate as calculated by [1] is zero. But this belies the fact that the portfolio’s composition changes continually due to new purchases.

Synonyms For Turnover

rotation, volume of business, turning, sales, remodelling

Cite Term

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Modern Language Association (MLA):
Turnover. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
December 08, 2022 https://payrollheaven.com/define/turnover/.
Chicago Manual of Style (CMS):
Turnover. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/turnover/ (accessed: December 08, 2022).
American Psychological Association (APA):
Turnover. PayrollHeaven.com. Retrieved December 08, 2022
, from PayrollHeaven.com website: https://payrollheaven.com/define/turnover/

Definition Sources

Definitions for Turnover are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 11th August, 2022 | 0 Views.