Financial
GMROI and Sell-Through Rate formulas (retail merchandising KPIs)
Measure Gross Margin Return on Inventory Investment (GMROI = Gross Margin $ / Avg Inventory Cost) alongside monthly SKU Sell-Through %.
Why GMROI unites low-margin fast movers and high-margin slow movers!
GMROI combines gross margin and inventory investment over a specified period.
For the example, ($500,000-$300,000)/$80,000=2.50 gross-margin dollars per dollar of average inventory at cost.
| Merchandising KPI | Formula | Sample Result |
|---|---|---|
| Gross Margin $ ($500k Sales - $300k COGS) | =A2 - B2 | $200,000 (40% Margin) |
| GMROI ($80k Avg Inventory @ Cost) | =(A2 - B2) / C2 | 2.50 ($2.50 per $1 stock) |
| Sell-Through % (420 sold / (200 beg + 400 recv)) | =D2 / (E2 + F2) | 70.0% (0.70) |
GMROI and period Sell-Through % formulas
Always value Average Inventory C2 at COST (not retail selling price!) in the GMROI denominator.
=ROUND((A2 - B2) / C2, 2)Period Sell-Through Rate (Units Sold / Available Inventory)
Divides units sold during the season by Beginning On-Hand + New Receipts.
=ROUND(D2 / (E2 + F2), 4)Inputs and interpretation
GMROI is period gross margin divided by average inventory at cost, not net profit or a guaranteed return. Compare consistent periods and positive average inventory. The sell-through denominator must be positive and reconciled for transfers, returns and other stock adjustments. Choose a consistent units-sold policy.
Try the example
Use the original values or change them to test your understanding.