Abstract
The results of a cross-sectional, ex postjucto study describing the relationships between profitability, inventory turnover, and gross margin return on investment in Alabama community pharmacies during fiscal year 1983 are presented. The objective of the study was to determine the relationship between gross margin return on investment and net profit. Based on a literature review of retailing, it was found that gross margin return on investment, GMROI, may bc useful as a predictor because of its comprehensiveness, ease of calculation, and acceptance as a proxy for profitability. GMROI is a ratio of gross margin as a percent of net sales multiplied by average inventory turnover. It has been referred to as an earn and turn ratio. Values between 150% and 250% have been reported as positively associated with profitability. GMROl and net profit were positively correlated (r = 0.5218, p< 0.001). Stepwise multiple regression was performed on all variables with net profit as the dependent variable. Gross margin ...
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