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GMROI Calculator — Gross Margin Return on Investment

Use values from the same period and currency. Fees and taxes apply only where explicitly included in inputs.

Use values from the same period and currency. Fees and taxes apply only where explicitly included in inputs.

Your workbenchInputs are not stored

Result

Enter your values and run the tool to see your result.

What this tool does

Measures how much gross profit each unit of money tied up in inventory generates. Enter gross profit in the first field and average inventory at cost in the second. Above 1 means the inventory earns more than it costs to hold.

How to use it

  1. Choose a period.
  2. In the first field, enter gross profit: revenue minus cost of goods sold.
  3. In the second field, enter average inventory valued at cost.
  4. Run it to get GMROI as a multiple.

Worked example

Gross profit 100 against average inventory 200 gives a GMROI of 0.5. Gross profit 500 against 200 gives 2.5.

Calculation method

Ratioa/b*1

Frequently asked questions

Can I value inventory at retail?
No. The denominator must be at cost. Using retail inflates the denominator and understates GMROI.
How does it differ from turnover?
Turnover counts sell-through only and ignores margin. GMROI effectively multiplies turnover by margin, so slow-moving but high-margin items are judged fairly.

What this tool does not cover

Holding costs, financing costs, and obsolescence risk are not reflected. Comparing across very different product categories can mislead.

References