GMROI measures an organization’s ability to turn inventory into cash in relation to the cost of the inventory.
GMROI = (Annual Sales / Average Inventory Cost) x (Gross Margin / 100)
- Investopedia – Gross Margin Return on Investment – GMROI – A simple explanation of GMROI.
- The Balance SMB – Calculate your gross margin return on inventory investment (GMROI) & How to calculate GMROI for a retail store – An pair of introductions to GMROI, how it is calculated, and how it can be used in a retail environment.
- The Retail Owners Institute – Getting through the retail maze with GMROI – Explains GMROI and gives some examples of how to use it to help make business decisions.