Question
How would I calculate GMROI for Apple Inc. for the last 5 years? The basic GMROI formula is: GMROI = Gross Margin / Average Inventory
How would I calculate GMROI for Apple Inc. for the last 5 years?
The basic GMROI formula is: GMROI = Gross Margin / Average Inventory Cost Your gross margin is your sales revenue minus the cost of goods sold, or the difference between what you pay for an item and what you sell it for. This is your profit and where most people look to judge their bottom line. But again, GMROI goes a step further to reveal how your inventory investment is working for you. To calculate your average inventory cost, you take the inventory cost at the beginning of every month, along with the ending inventory cost for the final month of your sample. GMROI is most useful when measuring over a year, so you should add up all of these costs and divide by 13 (12 months plus last end of month cost). If you were calculating for a quarter, you would divide by 4. When you divide your gross margin by your average inventory cost, you get your GMROI, which should be over 1.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started