Gross margin return on investment (GMROI): Definition, Formula & Why It Matters
Also called: GMROI
GMROI measures how much gross profit you earn for every dollar invested in inventory. It combines margin and inventory efficiency into one number. Above 1.0 means you are making money on your stock; resellers generally aim for 2.0 or higher.
Gross margin return on investment (GMROI) formula
Example
$20,000 of gross margin on $10,000 of average inventory is a GMROI of 2.0.
Why it matters for Reverb sellers
A product can have great margins but tie up so much cash for so long that it is a poor investment. GMROI exposes that by weighing margin against how much inventory you carry to earn it.
How Verbstack helps
Verbstack combines your margin and inventory data so you can judge which stock is genuinely worth the cash it ties up.
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