Gross Margin Return on Investment (GMROI)

GMROI is an acronym for Gross Margin Return on Investment (we actually calculate a GMROI figure that's specifically for "Inventory Investment"). GMROI is the number of inventory turns that represent profit. If an item has 7 turns in the past 12 months and a GMROI of 2.0, it means that 2 turns were profit.

The calculation for GMROII is below:

Total Sales and Total Cost of Sales use the totals for the past 12 months. Both turns and GMROI figures depend upon historical data for accuracy. Neither figure is particularly useful or accurate when less than a year's sales history is present.

Although the turns and GMROI figures are usually shown by month, they are not calculated for a monthly period. Each month's figures represent a full 12-month of activity. Turns and GMROI are reported relevant to that point in time, not just that month's figures. For example, the Turns (and GMROI) for March 2020 are calculated using the total usage and average on-hand over the 12-month period beginning April 2019. Yearly totals are not shown because the last month of the year represents the prior 12-month period.

Turns and GMROI are not recalculated with each sale. These figures are updated on a daily basis between business days (procedures are run from by application services or scheduled jobs to update certain totals at regular intervals). For this reason, any usage and on-hand changes from the current day would not be reflected in the figures shown.

Both Turns and GMROI are maintained and calculated from data in the Stock Value SQL table.