Inventory & operations

GMROI Calculator

Measure gross margin return on inventory investment using sales, cost of goods sold and average inventory at cost.

Free, no sign-upRuns in your browserFormula & methodology
US dollars
US dollars
US dollars

Results update as you type. Your numbers stay in this browser.

Gross margin return on inventoryExample2×
Gross profit
$80,000

Understand the result

How to calculate GMROI

GMROI = (sales − cost of goods sold) ÷ average inventory at cost

Use one period. A quarterly result is not an annual ratio. Gross margin excludes operating expenses and does not measure net profit.

Worked example

An illustrative scenario. “Reset to example” restores it in the calculator.

Sales for the period
$200,000
Cost of goods sold
$120,000
Average inventory at cost
$40,000

Gross margin return on inventory: 2×

Common questions

GMROI FAQ

How does GMROI differ from inventory turnover?

Turnover uses cost of goods sold as the numerator. GMROI uses gross profit, combining the effect of merchandise margin and stock investment.