This report is used to monitor the profitability of the investment in inventory using GMROI along with gross margin and the number of stocks on hand.
|Goals||Questions to ask||Dashboard views|
|Assist inventory purchase decisions||Which product category is doing well in bringing about both gross margin and GMROI?||GMROI vs Gross Margin $ Gross Margin $, GMROI and Average SOH $ by Category|
|Track outcomes of previous inventory purchase decisions||In a particular month what was the value of stocks on hand and their GMROI?||GMROI vs $ SOH|
GMROI or Gross Margin Return on Inventory Investment:
The profitability of every dollar you invest in inventory.
- The GMROI gives insights on how the past spending decisions on inventory have turned out so that they can be reviewed and optimized in the future.
- By breaking down GMROI into categories, it becomes convenient for any user to pinpoint where the highest GMROI lies and adjust their focus on it.
The average amount that the inventory returns over its cost can be seen by the investor or manager thanks to the GMROI. A ratio greater than 1 indicates that the company is making a profit on the goods it sells and that there is a healthy balance between its sales, margin, and cost of inventory and the opposite is true for a ratio below 1.