Net return on inventory and Gross margin return on inventory

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Net Return on Inventory (NROI) and Gross Margin Return on Inventory (GMROI) are critical metrics used in retail and merchandising to assess the efficiency of inventory management and its contribution to profitability. Understanding these concepts helps retailers optimize their inventory levels and improve financial performance.

Net Return on Inventory (NROI) is a measure of the profit generated by a company relative to its inventory investment. It is calculated by taking the net profit generated from the sales of the inventory and dividing it by the average inventory value over a specified period. The formula can be expressed as:

\[ 
\text{NROI} = \frac{\text{Net Profit}}{\text{Average Inventory Value}} 
\]

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Degree : BACHELOR DEGREE PROGRAMMES
Course Name : BBA in Retailing with the Modular Apporach
Course Code : BBARL
Subject Name : Buying and Merchandising-II
Subject Code : BRL 10
Year : 2024 2025