Business

Gross Margin ROI Calculator

GMROI: gross profit earned per dollar of inventory.

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ⓘ Live results

Results
GMROI
2.21
Gross profit
$210,000.00
Gross margin
35%
Inventory turns
4.11x

Quick answer

GMROI is annual gross profit divided by average inventory at cost. Above 1 means inventory earns more than it costs.

GMROI = gross profit / average inventory cost

How to use the Gross Margin ROI Calculator

  1. 1Enter annual sales and cost of goods sold.
  2. 2Enter the average value of inventory held at cost.
  3. 3Aim above 2.0 in most retail categories.

Worked example

Using the values the calculator loads with:

Inputs

  • Annual sales600000 $
  • COGS390000 $
  • Average inventory at cost95000 $

Results

  • GMROI2.21
  • Gross profit$210,000.00
  • Gross margin35%
  • Inventory turns4.11x

Frequently asked questions

Why not just use margin?

Margin ignores how much cash is parked in stock; GMROI captures both.

How do I raise GMROI?

Increase turns, trim slow lines, or negotiate better cost prices.

About this calculator

Results are estimates for general information. For medical, legal, structural or financial decisions, confirm with a qualified professional.