Measure the gross margin earned per dollar of average inventory.
Please do not make financial decisions based on these results.
What is the GMROI Calculator — Gross Margin Return on Investment?
Measure the gross margin earned per dollar of average inventory. To use the GMROI Calculator — Gross Margin Return on Investment, enter gross margin, average inventory at cost; it returns gmroi, margin per $1 of inventory, and shows them instantly as you type.
Where the GMROI Calculator — Gross Margin Return on Investment fits
Measure the gross margin earned per dollar of average inventory. The main figure it returns is the GMROI, worked out from the values you enter.
It belongs with the other business planning tools. If you are comparing options or checking a result from another angle, try the Contribution Margin Calculator, Business Budget Calculator or the Direct Material Price Variance Calculator.
How to use the GMROI Calculator — Gross Margin Return on Investment
- Fill in the fields. You will need Gross margin ($), Average inventory at cost ($). Use figures from the same period (same month, quarter or year) for every field. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the GMROI, and the cards below show Margin per $1 of inventory. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the GMROI Calculator — Gross Margin Return on Investment using the default values shown in the calculator above:
Inputs
| Gross margin ($) | 180,000 |
|---|---|
| Average inventory at cost ($) | 60,000 |
Results
| GMROI | 3 |
|---|---|
| Margin per $1 of inventory | $3.00 |
With these inputs the calculator returns GMROI: 3. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Gross margin ($) from 180,000 to 216,000 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| GMROI | 3 | 3.6 | +20% |
| Margin per $1 of inventory | $3.00 | $3.60 | +20% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the GMROI Calculator — Gross Margin Return on Investment reports GMROI and margin per $1 of inventory. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. The result is only as accurate as the numbers you enter and the formula shown above. It is for information, not financial, tax or legal advice.
Frequently asked questions
What is a good GMROI?
A value above 1 means inventory earns more than it costs; many retailers target 2 to 3.
Can these calculators replace an accountant?
No. They give fast estimates from your inputs. Use an accountant for tax, audited accounts and valuation reports.
Can I use these for a business plan?
Yes. They give quick estimates for break-even, valuation, budgets and project returns. Confirm important figures with your accountant before relying on them.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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