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Some people say that turnover is more important than profit margin in business. Why would some business people prefer to have high turnover than high profit margin when doing business?
Because it shows a company's capacity to make money and expand, turnover, also known as revenue, is frequently regarded as being more important than profit margin. High turnover is a sign of a competitive market, strong consumer demand, and successful sales. While profit margin is a measure of profiRead more
Because it shows a company’s capacity to make money and expand, turnover, also known as revenue, is frequently regarded as being more important than profit margin. High turnover is a sign of a competitive market, strong consumer demand, and successful sales. While profit margin is a measure of profitability, other elements like costs and price can have an impact as well. High turnover is a crucial sign of the health and sustainability of an organization because it can result in higher revenues.
See lessThis is not always the case, turnover will be more important than profit in business, let's discuss it together: Turnover is the result of sales from sales turn over, while profit is the net profit of the business after the cost of goods sold is reduced by the cost of goods purchased, expenses and tRead more
This is not always the case, turnover will be more important than profit in business, let’s discuss it together: Turnover is the result of sales from sales turn over, while profit is the net profit of the business after the cost of goods sold is reduced by the cost of goods purchased, expenses and taxes. Prioritize Profit, if the product you are selling is a retail product that does not have an expiry date, such as cooking utensils, clothing, shoes, sandals, glasses, etc. So prioritizing large profits is the right choice, because sales turnover will be slow and of course inventory turnover will also be small. Prioritizing Turnover will be more suitable for fast moving businesses or products that have an expiry date, so that inventory turnover will be faster, so that the supply of goods will always be fresh and new, so you need to avoid products failing to sell because they are expired which will cause business losses. Prioritizing turnover requires large promotional costs and discounts and your business must enter the distribution market and create a network. Because the costs are large, even though the turnover is large, the net profit margin is not large. So the point is that in doing business, whatever your goals are, whether turnover or profit, you must have a healthy and controlled cash flow. It’s no use if you make big profits in the form of accounts receivable.
See lessHere are a few reasons why turnover may be more important than profit margin for a business: High turnover indicates poor employee satisfaction and engagement. This can lead to lower productivity, poor customer service, higher recruiting/training costs, and damage to the company's reputation. FocusiRead more
Here are a few reasons why turnover may be more important than profit margin for a business:
In summary, turnover indicates how well a company retains, engages, and satisfies employees. Addressing high turnover improves operational execution, service quality, cost structure, and workforce stability. For these reasons, monitoring and managing turnover is critical, even if short-term profit margin is satisfactory. They work together to drive sustainable success.
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