Turn Over Rate Calculation

Turnover Rate is a kind of ratio that helps in evaluating the degree of employee involvement within a business. The turnover rate shows the number of employees that are leaving the company or they are replaced by the company itself. In most of the companies the term turnover is associated with the human resource and is the measurement of the efficiency and the effectiveness of the employees of a company.  Companies calculate the turnover rate to find out the degree of productivity and profitability of the employees and also to find out what has minimized the degree of profitability of the employees. There are a number of different input parameters that can be used to calculate turnover rate that can be shown as under:-

Turnover Rate

(Number of employees leaving the company/ Total Number of employees on Payroll)/ 100

The number of employees leaving the company involves both the types of employees leaving the company voluntarily or involuntarily. The annual turnover rate can also be calculated by calculating the cumulative turnover rates of all the months like January, February, March, April and so on.

Another formula that may be used to calculate the employee turnover rate can be shown as under:-

Average Number of Employees/ Total Number of employees leaving the company in past 12 months

Another term related to the turnover rate is the employee turnover cost that can be calculated by using the following figures

Total Annual Salary

Total Annual Benefits

The duration of Leave or Vacancy of employee

One thing to lower the turnover rate is to make the pain of leaving higher than that of the pain of staying in the company.

Other Related Accounting Articles:

• Pooled Internal Rate of Return
• Contribution Margin per Unit
• Financial Ratios as described by the Balance Sheet
• Least Cost Decisions
• Transaction Risk
• Joint Product Cost Analysis for Managerial Decisions and Profitability Analysis
• Financial Gearing
• Other Current Assets OCA
• Inflation and Capital Budgeting Analysis
• Installment Method of Revenue Recognition