Enter the gross profit (\$) and the average inventory cost (\$) into the Return on Margin Calculator. The calculator will evaluate and display the Return on Margin.

## Return on Margin Formula

The following formula is used to calculate the Return on Margin.

ROM = GP / AIC *100

• Where ROM is the Return on Margin (%)
• GP is the gross profit (\$)
• AIC is the average inventory cost (\$)

## How to Calculate Return on Margin?

The following example problems outline how to calculate Return on Margin.

Example Problem #1:

1. First, determine the gross profit (\$).
• The gross profit (\$) is given as: 68.
2. Next, determine the average inventory cost (\$).
• The average inventory cost (\$) is provided as: 175.
3. Finally, calculate the Return on Margin using the equation above:

ROM = GP / AIC *100

The values given above are inserted into the equation below and the solution is calculated:

ROM = 68 / 175 *100 = 38.85 (%)

Example Problem #2:

For this problem, the variables needed are provided below:

gross profit (\$) = 90

average inventory cost (\$) = 150

This example problem is a test of your knowledge on the subject. Use the calculator above to check your answer.

ROM = GP / AIC *100 = ?