GMROI (Gross Margin Return on Inventory) Calculator
Calculate GMROI to see how much gross margin you earn for every dollar invested in inventory and compare it with a target hurdle rate.
GMROI is a merchandising efficiency metric and should be interpreted alongside sell-through, margin mix, and inventory turn.
Examples
- Net sales $1,250,000, COGS $750,000, average inventory $200,000, target 2.0x ⇒ GMROI: 2.50x. Gross margin: $500,000.00 (40.00%). Target 2.00x: Above target by 0.50x.
- Net sales $420,000, COGS $315,000, average inventory $175,000, target blank ⇒ GMROI: 0.60x. Gross margin: $105,000.00 (25.00%). Target 2.00x: Below target by 1.40x.
FAQ
What GMROI value is considered healthy?
Benchmarks vary by category, but many retailers target a GMROI between 2.0x and 4.0x to cover operating costs and capital return expectations.
Should I use retail or cost values?
Use cost values for inventory and gross margin so the metric reflects capital invested, not marked-up retail values.
How often should GMROI be recalculated?
Most teams review GMROI monthly or quarterly, especially after seasonal resets or major assortment changes.
Additional Information
- Inputs should be recorded at cost in USD and aligned to the same reporting period.
- Average inventory is typically the mean of beginning and ending inventory balances at cost.
- GMROI is a unitless multiple; compare it against internal hurdle rates and category benchmarks.