GROI is gross return on investment and is figured as:
Profit ÷ Average Value of Inventory
In other words, an item in inventory 6 months will have an average cost of ½ its value, an item entering into a period over 1 year will reflect its full value.
TROI is true return on investment and is figured as:
For example, suppose an item costs $100 and sells for $200:
|
|
GROI |
TROI |
|
Item sold in 6 months |
200% |
200% |
|
Item sold in 9 months |
133% |
133% |
|
Item sold in 12 months |
100% |
100% |
|
Item sold in 18 months |
100% |
66% |
|
Item sold in 24 months |
100% |
50% |