Gross margin return on inventory

Gross margin percentage multiplied by inventory turns. What a retailer earns for every rupee tied up in stock.

A category running a 35% gross margin at five turns produces 1.75.

The measure is how a category manager actually decides what to stock, because it captures the trade-off between margin and velocity in a single number. A low-margin staple that turns twenty times can outperform a high-margin item that turns twice.

It also explains retail assortment decisions that look irrational from outside.