GMROII % Calculator
Gross Margin Return On Inventory Invested (%) Calculator Explained:
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.
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 $2 of GP back at the end of the year. GMROII is often used by large retailers to assess their category performance.
Why should I use it?
Because it combines two major measures, how much money you are making (GP$) and how often you make it (Stock Turn).
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.