Gross margin return on investment

What is gross margin return on investment?

Definition

Gross margin return on investment helps you determine how profitable every dollar you invest in inventory is to your company. You can calculate and compare gross margin return on investment for various product SKUs, or even variants within a particular SKU. It can take you as broad or as deep as you need to go to measure your operation's profitability

Formula

Gross margin return on investment = gross margin / average inventory cost