GMROI Calculator

GMROI Definition

GMROI is defined as the gross margin return on an investment over a given period of time. It measures the profitability of a retailer's inventory by comparing the gross profit earned to the average inventory cost.

Formula

The formula to calculate the GMROI is:

\[ GMROI = \left( \frac{GP}{AIC} \right) \times 100 \]

Where:

$ GMROI $ is the gross margin return on investment (%).
$ GP $ is the gross profit ($).
$ AIC $ is the average inventory cost ($).

Example

Let's say the gross profit is $50,000 and the average inventory cost is $25,000. Using the formula:

\[ GMROI = \left( \frac{50000}{25000} \right) \times 100 \]

We get:

\[ GMROI = 200 \]

So, the GMROI is 200%.