Gross Margin ROI

Evaluate the return generated on inventory investment by comparing gross profit to the cost of goods sold.

Inventory & Margin Data

Revenue minus cost of goods sold

(Beginning inventory + ending inventory) / 2

About GMROI

Gross Margin Return on Investment (GMROI) evaluates how much gross profit is earned for every dollar invested in inventory. It helps retailers and wholesalers assess inventory profitability.

Results

GMROI

dollars return per dollar invested

Gross Margin

Return per $1 of Inventory

Interpretation

Formula

GMROI = Gross Margin / Average Inventory Cost

A GMROI above 1.0 means the company earns more in gross margin than it invests in inventory. Above 3.0 is generally excellent.

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