Gross Margin Return on Investment
Formula: Gross Margin Return on Investment = Gross Margin / Average Inventory Cost
The Gross Margin Return on Investment (GMROI) is a measure of a company's profitability and inventory efficiency. It calculates how much gross profit is earned for every dollar of inventory investment. This metric is particularly useful in retail and manufacturing industries to evaluate inventory management effectiveness and make informed decisions on pricing, buying, and merchandising.