Free tool · Robert × Dor
GMROI &
inventory turns calculator.
Enter gross margin and average inventory at cost for each category to see how many dollars of margin every dollar of stock earns, how fast it turns and where cash is sitting still.
GMROI calculator
Store GMROI
1.88
Every $1 tied up in stock earns $1.88 of gross margin a year. Accessories works hardest; Footwear works least.
- Inventory turns
- 1.9× a year
- Days of stock on hand
- 189days
- Gross margin
- 49.3%
- Avg inventory at cost
- $118,000
| Category | GMROI | Turns | GM % | Share of stock | Share of margin |
|---|---|---|---|---|---|
| Apparel | 2.00 | 2.0 | 50% | 51% | 54% |
| Accessories | 3.00 | 2.0 | 60% | 15% | 24% |
| Footwear | 1.20 | 1.8 | 40% | 34% | 22% |
| Total | 1.88 | 1.9 | 49% | 100% | 100% |
Read across the last two columns. A category holding more of your stock than it earns of your margin is where cash is sitting still.
Show your work
GMROI = gross margin $ ÷ average inventory at cost$222,000 ÷ $118,000 = 1.88Cost of goods sold = net sales − gross margin $$450,000 − $222,000 = $228,000Inventory turns = cost of goods sold ÷ average inventory at cost$228,000 ÷ $118,000 = 1.93Days on hand = 365 ÷ turns365 ÷ 1.93 = 189Check: GMROI = turns × gross margin ÷ (1 − gross margin)1.93 × 49.3% ÷ 50.7% = 1.88
Worked example.
A shoe and clothing store looks at a full year across three categories:
- Apparel: $240,000 sales, $120,000 gross margin, $60,000 average stock at cost. GMROI = $120,000 ÷ $60,000 = 2.00. Cost of goods $120,000 ÷ $60,000 = 2.0 turns.
- Accessories: $54,000 margin on $18,000 of stock: GMROI 3.00, 2.0 turns.
- Footwear: $48,000 margin on $40,000 of stock: GMROI 1.20, 1.8 turns.
- Store: $222,000 ÷ $118,000 = 1.88, with 1.9 turns (about 189 days of stock).
Footwear holds 34% of the stock but earns 22% of the margin. Accessories hold 15% of the stock and earn 24%. Before the next buy, that’s the conversation: thinner footwear depth, or more space and open-to-buy for accessories.
What GMROI tells you that margin doesn’t.
Gross margin % says how much you keep on each sale. GMROI adds speed: how hard the money sitting on your shelves works. A 60% margin item that sits for a year can earn less per dollar of stock than a 35% margin item that turns six times.
Because GMROI = turns × margin ÷ (1 − margin), there are only two ways to raise it: sell through faster (sharper buying, fewer slow sizes, quicker markdowns) or keep more margin on each sale. Traffic and conversion drive the first; a door counter tells you which one is short.
There is no universal “good” GMROI. It depends on category, rent and how much cash you need back from stock. Above 1 means stock returns more gross margin than it costs; compare categories with each other and with your own last year.
Questions retailers ask.
How do you calculate GMROI?
Divide gross margin dollars for a period by your average inventory at cost for the same period. $120,000 of annual gross margin on $60,000 of average stock is a GMROI of 2.0. If the period is shorter than a year, annualize the margin first.
What is a good GMROI for retail?
Above 1.0 means stock earns back more gross margin than it costs. Beyond that it varies by category and business model, so compare your categories against each other and against your own history rather than a single benchmark.
What is the difference between GMROI and inventory turnover?
Turnover counts how many times you sell through your average stock (cost of goods sold ÷ average inventory at cost). GMROI multiplies that speed by margin: GMROI = turns × margin ÷ (1 − margin).
Why use inventory at cost, not retail?
Cost is the cash you actually tied up. Using retail value would understate GMROI and mix in markup you haven’t earned yet.
How do I work out average inventory?
Take inventory at cost at the start of the period and at each month-end, add them up and divide by the number of counts. Two counts (start and end) work, but miss seasonal peaks.
Stock only turns if people walk in.
Dor counts visitors at the door and pairs them with your POS sales, so you can tell slow stock from slow traffic.
Book a Dor demo (opens dorhq.com in a new tab)