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title: "GMROI"
canonical: "https://kb.myframeworks.com.au/space/PROSTIXV48DOC/31103390/GMROI"
format: markdown
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GMROI (Gross Margin Return on Inventory) is a measurement of the effective utilisation of inventory, and is used as a tool to monitor the performance of stock throughout the organisation, to assist in merchandising and ordering decisions. It is expressed as a calculated value and, in general, the higher the number the more effective the use of inventory. As a guide a GMROI of 150 is commonly regarded as being satisfactory. GMROI is calculated as GP% x Stock Turns.  Stock Turns are calculated as $ Cost of Sales / $ Average Cost of Inventory.  Both calculations are over a 12-month period, however, in cases where there is less than 12 months history to establish a GMROI, it is estimated from current data. Products displaying estimated GMROI calculations, is flagged as such in reporting and enquiries. Once calculated, GMROI may be viewed by major group, product group, sub group or product number, using the GMROI enquiry and reporting facility. Keep in mind when reading the GMROI figures on the enquiry and reports that the sales and stock values are averages over the year, so if you are trying to justify GMROI values then they must be compared with Sales and Stock figures over the last 12 months. Also be aware of products that have sporadic activity.  A product for instance that has been quiet for a while and then in a single month has had a large increase and then decrease of stock shows a very large Stock Turn and therefore GMROI for that particular month. The ability to calculate and enquire on GMROI figures is currently controlled by the feature code  FeatureGMR . Refer to the following links/processes for further information: