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GMROI Calculator (Gross Margin Return on Investment)

LAST UPDATE: August 23rd, 2018

Calculator

What is GMROI (Gross Margin Return on Investment)?

GMROI measures an organization’s ability to turn inventory into cash in relation to the cost of the inventory.

Formula

GMROI = (Gross Margin $ / Average Inventory Cost) x 100%

GMROI = ((Annual Sales x (Gross Margin / 100%)) / Average Inventory Cost) x 100%

Example

A store has a revenue of $500,000, gross margin of 30%, and average inventory cost of $100,000.

GMROI = (($500,000 x (30% / 100%)) / $100,000) x 100% = (($500,000 x 0.3) / $100,000) x 100% = ($150,000 / $100,000) x 100% = 1.5 x 100% = 150%

Therefore, this store has a GMROI of 150%.

Sources and more resources