GMROI is defined as the gross margin return on investment/inventory (as a percentage). If less than a year’s history is available, the formula calculates based on the available history. The following is used for the GMROI formula:
GMROI = Total Year’s Gross Profit $/(Year’s Avg Units On Hand * Year’s Avg Unit Cost $)
Total Year’s Gross Profit $ = Year’s sales dollars - Year’s cost dollars (from Product History File )
Year’s Avg Units On Hand = Sum of average units on hand from each month (from Product History File) / number of months of available history (not to exceed one [1] year).
Year’s Avg. Unit Cost $ = Sum of the costs of the goods sold for the period of history available (not to exceed one [1] year) / number units sold during that same period.
Turns is defined as the inventory turnover ratio. If less than a year’s history is available, the formula will be calculated based on the available history. The following is used for the Turns formula:
Turns = Year’s Cost Of Goods Sold $/Year’s Avg Units On Hand * Year’s Avg Unit Cost $
Year’s Cost Of Goods Sold $ = Sum of the cost of merchandise sold over the period of available history (not to exceed one [1] year).
Year’s Avg Units On Hand = Sum of average units on hand from each month (from Product History File) / number of months of available history (not to exceed one [1] year).
Year’s Avg Unit Cost $ = Sum of the costs of the goods sold for the period of history available (not to exceed one [1] year) / number units sold during that same period.