DECA Marketing Cluster Practice Exam

What best describes 'turnover' in a business context?

1. The total revenue generated by a business during a specific time

2. The rate at which businesses close down

3. The frequency of employee retention

4. The total amount of inventory a business holds

The correct answer is: The total revenue generated by a business during a specific time

In a business context, 'turnover' best describes the total revenue generated by a business during a specific time period. This definition encompasses income from sales of goods or services before any expenses are deducted. Understanding turnover is crucial for evaluating a company's performance, as it indicates the overall financial health and market activity of the organization. It reflects the effectiveness of a company's sales strategies and market demand for its offerings. Other definitions may have relevance in specific contexts—such as the frequency of employee retention, which pertains more directly to human resources, or the total amount of inventory, which relates to inventory management—but they do not represent the broader financial meaning associated with turnover in a revenue-generating context. Thus, recognizing turnover as the total revenue captures the primary concept needed for assessing business performance.