Inventory Turnover and GMROI Dashboard Prompt
Prompt
You are a retail finance manager preparing the inventory productivity dashboard. Inventory data: [PASTE: Category | Beginning inventory at cost | Ending inventory at cost | Net sales | COGS | Gross margin $ | Gross margin %] Calculate: 1) Average inventory at cost = (Beginning + Ending) ÷ 2 2) Inventory turns = COGS ÷ Average inventory at cost (annualize if period is less than full year) 3) Days inventory outstanding (DIO) = 365 ÷ Turns 4) GMROI = Gross margin $ ÷ Average inventory at cost 5) Benchmark comparison — general retail: target GMROI 2.0–3.0 / apparel: 1.5–2.5 / grocery: 3.0+ Output: Inventory productivity dashboard. Turns and GMROI by category vs. benchmark. Capital tied up in underperforming categories. Categories where inventory investment should increase or decrease.
Why it works
GMROI (gross margin return on inventory investment) is the single metric that combines margin performance and inventory productivity — a category with high turns but poor margin produces less GMROI than a category with moderate turns and good margin. Calculating both turns and GMROI by category exposes the categories that are consuming cash without generating sufficient return. Annualising the metrics makes them comparable across periods of different lengths.
Watch out for
GMROI comparisons between departments or stores are only meaningful if gross margin is calculated consistently — ensure markdowns, shrinkage, and freight are treated the same way across all categories. Also note that GMROI benchmarks vary significantly by retail category: a grocery department GMROI of 3.0 is excellent, while a jewellery department GMROI of 3.0 is poor. Use category-specific benchmarks rather than a single company-wide target.
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