GMROI Ratio Calculator
Gross Margin Return On Inventory (GMROI) Ratio Calculator Explained:
(a) What is this? The Gross Margin Return On Inventory (GMROI) ratio tells you how many times the Gross Margin is earned from the inventory investment.
(b) What does this tell me? The GMROI calculations assist buyers evaluating whether a sufficient gross margin is earned by the products purchased, compared to the investment in inventory required to generate the Gross Margin $. The more money (the higher the ratio) you make, the better it is. You can use it to compare products within a category, and you can use it to compare categories. This ratio is presented as a single number which will differ significantly by product and by category.
Note that the GMROI and GMROII are NOT the same equation and are used to measure slightly different things.
(c) Why should I use it? To assess whether the ratio is growing, static or declining. Note that the GMROI ratio excludes Stock Turn information. A growing GMROI number is the desired outcome.
(d) Caution: GMROI is just one tool at your disposal, there are other GMROI/GMROII tools. It does not tell you what to do. Any decisions you make are at your own risk.