Reviewing the Gross Margin Return on Investment (GMROI) Report
The gross margin on investment indicates the profitability of an investment relative to its revenue or sales. A higher gross margin signifies greater profitability, while a lower margin may indicate lower profitability or higher costs.
Click Menu at the top of the screen
2. Click Point of Sale to expand the menu. Click Reports
3. Click the Inventory tab
Click the GMROI tab
4. Select Calculate GM By (group, location or brand) using the drop down
5. Select the location(s) using the Select Locations drop down to calculate your inventory. Leave blank to view all locations
6. Select the time period by clicking the For Time Period field. Select a time period from the choices on the left of the menu. Click Apply
To create a custom range, click the first date of the range and hover the cursor over the days to be included in the range. This will highlight the selected days. Click the last date of the range to complete the range
7. To view GMROI details, click the black triangle to the left of the location name
Using the GMROI:
The gross margin on return of investment is a metric used to assess the profitability of an investment relative to its initial cost. Here's how you can use it:
Evaluate Investment Opportunities: Compare the gross margins to identify brands, locations and groups with higher profitability relative to their initial costs. This helps prioritize investments with the potential for better returns.
Assess Profitability: Use the GMROI to assess the profitability of existing brands, locations and groups. Calculate the gross margin for each investment to determine which ones are generating the highest returns relative to their initial costs. This helps identify underperforming investments that may require adjustments or divestment.
Monitor Investment Performance: Continuously monitor the GMROI for each investment to track performance over time. Compare current gross margins to historical data to identify trends and patterns.
Optimize Investments: Allocate resources to investments with higher gross margins and potential for better returns. Consider reallocating funds from underperforming investments with lower gross margins to opportunities with higher profitability potential.
Forecast Future Returns: Use historical data on gross margins to forecast future returns on investments. Consider factors such as market conditions, industry trends, and potential risks to make informed projections. This helps in financial planning and decision-making for future investments.