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one of the biggest assets on the retaileramp;#39;s balance sheet is inventory and so retailers need to make sure they are making the most out of this asset every year the metric used to measure this return is called gross margin return on investment aka gmry it measures the amount returned on every dollar invested in inventory for example if gm roi equals 3 it means that for every dollar you invested in inventory the return is 3 dollars the formula to calculate gmroi is gm roi equals gross profit divided by average inventory at cost value for example letamp;#39;s say you sold products for a hundred thousand dollars in a year at a gross margin of 45 the average inventory you carried at cost value for this year was 35 000 now letamp;#39;s apply the formula to calculate gmry the gross profit equals 45 000 this will be divided by average inventory at 35 000 and the result will be 1.285 this means that for every dollar you invested in inventory you made 1.285 in gross profit the key to i
