GMROI Calculator - Gross Margin Return on Inventory Investment

Your details

Standard mode calculates GMROI. Reverse-solve mode works backwards from a target GMROI to find the required average inventory level.
Total revenue after returns and allowances for the period.
Direct costs to produce or purchase the goods sold. COGS = Net Sales - Gross Profit.
The average value of inventory at cost during the period. Typically (beginning inventory + ending inventory) / 2.
Inventory at cost at the start of the period. Used to compute average inventory when both values are known.
Inventory at cost at the end of the period. When provided together with beginning inventory, the average is computed automatically and overrides the average inventory field.
Currency
GMROIHealthy
2x

Gross profit generated per dollar of average inventory investment

Gross margin$200,000
Gross margin %0.4%
Inventory turnover3x/yr
2 x
Below break-even<1Marginal1-2Healthy2-3.5Excellent3.5+

GMROI of 2.00x - healthy inventory performance.

  • Industry benchmarks for most retail sectors sit between 2x and 3.5x. You are in a solid range.
  • Your gross margin is 40.0%, which drives 40.0 cents of every sales dollar toward covering overhead and profit.
  • Inventory turns 3.0 times per year. Higher turnover means faster cash recovery and lower carrying risk.

Next stepUse the reverse-solve mode to set target GMROI levels for individual product categories and assess which ones are dragging down the overall figure.

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