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GMROI Calculator
Calculate gross margin return on inventory investment using sales, cost of goods sold and average inventory at cost. Compare inventory profitability.
What does this calculator measure?
Gross margin return on inventory investment (GMROI) measures gross profit earned for each unit of currency invested in average inventory at cost. A GMROI of 2 means 2 in gross profit for every 1 held in average inventory during the measured period.
Enter your figures
Use one consistent period. Calculations run locally in your browser.
Revenue after discounts and returns for the chosen period, excluding collected sales tax.
Cost of products sold in the same period, in the same currency.
Average inventory investment over the period; use cost rather than retail price.
Your result
Fill in all fields or load the worked example to see your result.
Put your figures to work
Keep stock costs and sales records together to support repeatable product profitability reviews.
Start managing inventoryFormula and worked example
GMROI = (Sales revenue − Cost of goods sold) ÷ Average inventory at cost
Sales of 150,000 minus COGS of 90,000 produce gross profit of 60,000. Dividing by average inventory at cost of 30,000 gives GMROI of 2.00 for that period.
How to use the calculator
- Choose the product, category or business and the period you want to review.
- Enter the figures described beside each field using consistent units.
- Review the result alongside the assumptions below before changing purchasing or stock plans.
How to interpret your result
Compare categories over the same period and currency. GMROI above 1 means gross profit exceeds average inventory investment for that period; it does not mean net profit is positive because operating expenses are excluded. Monthly results are not automatically annualized. For seasonal stock, average several inventory snapshots instead of relying only on opening and closing values.
Explore the inventory workflow in My Inventory ItemsFrequently asked questions
Should average inventory use cost or selling price?
Use acquisition cost consistently with your COGS method. Retail value overstates the investment denominator and changes the meaning of GMROI.
How do I find average inventory?
A simple estimate is opening inventory cost plus closing inventory cost, divided by two. Averaging regular daily or monthly snapshots better reflects fluctuating or seasonal stock.
Can GMROI be negative?
Yes. If COGS exceeds sales revenue, gross profit and GMROI are negative. The calculator preserves the negative value so losses remain visible.