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%.

Extended information about "GMROI-Calculator"

GMROI Calculation

Formula: $ GMROI = \frac{\text{Gross Margin}}{\text{Average Inventory Cost}} $

$ GMROI $: Gross Margin Return on Inventory
$ \text{Gross Margin} $: Gross margin (currency)
$ \text{Average Inventory Cost} $: Average inventory cost (currency)

Example: $ GMROI = \frac{50000}{20000} $

GMROI: Gross Margin Return on Inventory
Gross Margin: 50000
Average Inventory Cost: 20000

Gross Margin Calculation

Formula: $ GM = \text{Revenue} - \text{Cost of Goods Sold} $

$ GM $: Gross Margin (currency)
$ \text{Revenue} $: Total revenue (currency)
$ \text{Cost of Goods Sold} $: Cost of goods sold (currency)

Example: $ GM = 100000 - 60000 $

GM: Gross Margin
Revenue: 100000
Cost of Goods Sold: 60000

Gross Margin Return on Inventory (GMROI) Calculation

Formula: $ GMROI = \frac{\text{Gross Margin}}{\text{Average Inventory Cost}} $

$ GMROI $: Gross Margin Return on Inventory
$ \text{Gross Margin} $: Gross margin (currency)
$ \text{Average Inventory Cost} $: Average inventory cost (currency)

Example: $ GMROI = \frac{75000}{25000} $

GMROI: Gross Margin Return on Inventory
Gross Margin: 75000
Average Inventory Cost: 25000