GMROII % Calculator
Gross Margin Return On Inventory Invested (%) Calculator Explained:
(a) What is this? Gross Margin Returned On Inventory Invested (GMROII) generates a number which is expressed as a %. It combines GP% and stock turn to give you an efficiency ratio.
(b) What does this tell me? This calculator combines stock turn and GP% to determine a percentage. The more money you make (the higher the percentage) generally the better things are. 100% means you invested $1 at the start of the year (or time period) and that $1 generated $1 of GP profit by the end of the year (or time period). 200% means you invested $1 and got $2 of GP back at the end of the year. GMROII is often used by large retailers to assess their category performance.
(c) Why should I use it? Because it combines two major measures, how much money you are making (GP$) and how often you make it (Stock Turn).
(d) Caution: GMROII is just one tool at your disposal. It does not tell you to exit or enter categories or products, but it is a useful point of comparison. Use this tool with recognised financial measures. Any decisions are at your risk.