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Retail & Allocation lesson

GMROI

Gross margin is what's left after the cost of goods. GMROI compares it with the stock it took to earn it.

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About 5–10 minutes · no sign-up needed

The idea

Gross margin is what's left after the cost of goods. GMROI compares it with the stock it took to earn it:

Formulas

Gross margin ÷ Avg inventory

Key points

GMROIGross margin return on inventory: the margin earned for every dollar of stock.
Work it outDivide gross margin dollars by average inventory at cost.
Over 1 is healthyEach dollar of stock earned more than a dollar of margin. Under 1 is a warning.

GMROI is how buyers and planners decide which categories deserve more money and space.

Practice

Try each one in your head first, then open the answer.

1. What is the GMROI for Cases?
$12,000 ÷ $4,000 = 3.0
2. Your report compares GMROI across the five categories. Which visual?
Bar chart
3. Tap the category with the lowest GMROI: it earns the least for its stock.
Power banks earn 50 cents for every dollar of stock.
4. Power banks have 20% markdowns and a GMROI of 0.5. What's the best next step?
Buy less next season, and clear the extra stock now

Learn it by doing. This lesson is a short hands-on level on Bampaa: see it work, then build and write it yourself, with instant feedback.

Try this lesson free →
About 5–10 minutes · no sign-up needed