GMROI Calculator Online

Retailers and inventory managers use the Gross Margin Return on Investment (GMROI) Calculator as an essential tool to measure the efficiency and profitability of inventory investment in retail and inventory management. This tool helps in evaluating the relationship between the cost of inventory and the profits generated from that inventory.

Formula of GMROI Calculator

The GMROI formula is calculated as follows:

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

Where:

• Gross Margin represents the total revenue generated from the sale of products minus the Cost of Goods Sold (COGS). It is express as a decimal (e.g., 0.40 for a 40% gross margin).
• Average Inventory Cost is the average cost of inventory over a specific period and is determined by the formula:

Average Inventory Cost = (Beginning Inventory + Ending Inventory) / 2

Table of Commonly Searched Terms

Term	Definition
Inventory Turnover	Measures how many times inventory is sold or used
Cost of Goods Sold	The direct costs attributable to the production
Retail Efficiency	The ability to maximize profits from inventory
Inventory Management	The process of overseeing and controlling inventory

This table provides an easy reference for commonly searched terms related to GMROI, aiding users in understanding without having to calculate each time.

Example of GMROI Calculator

Let’s consider a retail store that had a gross margin of $50,000 and an average inventory cost of $25,000 over a specific period. Applying the GMROI formula:

GMROI = ($50,000 / $25,000) x 100 = 200%

This indicates that for every dollar invested in inventory, the store generates a return of $2, showcasing the efficiency of their inventory management.

Most Common FAQs