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Test your basic knowledge |
Retail Financials
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Study First
Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Profit and Loss Statement (P&L Statement)
Cumulative Markup % Formula
Clearance Markdowns
Acid test or Quick Ratio
2. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
GMROII (Gross Margin Return on Inventory Investment)
Markdown Optimization
Current Ratio (CR) Formula
Off-Price Markdown Percentage Formula
3. Inventory Valuation Method where the cost to the retailer of each item purchased from a vendor is entered in the accounting system and/or placed on the merchandise item or on it's package. At times - freight charges are built into the cost. Coding of
Markdown Cancellation ($) Formula
The Cost Method
Clearance Markdowns
Pricing Strategies: Price Lining
4. Basic premise is to increase profits through more sales without an increase in inventory. Inventory is expressed in cost terms rather than cost percent - because it is related to investment dollars in gross margin - it should be expressed in cost num
Late Markdowns
Current Assets
Profit
GMROII (Gross Margin Return on Inventory Investment)
5. Price reduction for merchandise that has not lived up to buyers' expectations. Includes broken assortments of merchandise - merchandise lines that buyers no longer want to carry - shopworn goods - items that haven't sold because of an event beyond bu
Clearance Markdowns
Cash Flow Formula
Pricing Strategies: Price Ranges
Initial Markup (IMU)
6. The cost of merchandise that was sold (including the method that was used to determine cost)
Markup % of Retail Formula
Cost of Goods Sold
Dollar Markdown Formula
Cumulative Markup % Formula
7. The higher the ratio the quicker current liabilities can be paid. This ratio also indicates the margin of safety a retailer has on hand to cover possible shrinkages
Current Ratio
Return on Net Worth (RONW) Formula
Markdown Percentage Formula
Inventory
8. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Fixed Assets
Acid test or Quick Ratio
Financial Leverage Ratio
Pricing Depends on 2 factors
9. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Promotional Markdown
Adage of Profitability for Retailers
Markdown optimization
Markdown Percentage
10. The retailers financial condition at a specific point in time
Balance Sheet
Pricing Strategies: Price Zones
Off-Price Markdowns
Expense Ratio Formula
11. To make a profit buyers must set an appropriate price considering many variables and using past experience and knowledge of future trends. A markup on an item does not typically remain constant.
Assets Formula
Markup
Cost of Goods Sold (COGS) Formula
Return on Sales
12. Net Profit/ Net Sales
Acid Test or Quick Ratio (QR) Formula
Profit Margin Analysis Formula
Markdown Optimization
Loss-Leader
13. (planned expenses + planned operating profit + planned stock shortages + markdowns + employee and customer discounts) / (planned net sales + stock shortages + markdowns + employee and customer discounts) x 100%
Planned Initial Markup % Formula
Markdown Cancellation ($) Formula
Pricing Strategies
Financial Leverage Ratio
14. Having the right merchandise - at the right time - for the right price - in the right place
Cumulative Markup % Formula
Temporary Price Reduction
Adage of Profitability for Retailers
Current Assets
15. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Planned Initial Markup % Formula
Cost Complement Formula
Current Liabilities
Markup
16. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cash Flow Formula
Assets Formula
Cumulative Markup
The Cost Method
17. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Balance Sheet
Pricing Strategies
Financial Leverage Ratio
Off-Price Markdowns
18. The prices from lowest to highest that are carried within a merchandise category
Return on Sales
Pricing Strategies: Price Ranges
Profit Margin
New Price
19. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Initial Markup (IMU)
Markup
Pricing Strategies: Price Lining
Current Assets
20. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Markdown Optimization
Off-Price Markdowns
Gross Margin
Uncontrollable Errors
21. Buying errors - promotion errors - pricing errors - uncontrollable errors
Cash Flow Formula
Late Markdowns
Retail Price Formula
Reasons for taking Markdowns
22. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
Regular Price
Assets
Markdown Optimization
23. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Current Ratio (CR) Formula
Turnover Rate Formula
Current Liabilities
24. Net Profit After Taxes/ Net Worth
Pricing Strategies: Price Lining
Buying Errors
Return on Net Worth (RONW) Formula
Cumulative Markup
25. The weather - merchandise is shopworn - economic downturn
Acid Test or Quick Ratio (QR) Formula
Uncontrollable Errors
Debt Equity Ratio
Ideal Markdown
26. Original Retail price- markdown selling price
Uncontrollable Errors
Dollar Markdown Formula
Accounts Receivable (AR)
Markup % of Retail Formula
27. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Late Markdowns
Inventory
Markdown
Debt Equity Ratio
28. Dollar markup ($)/ cost price ($)
Fixed Liabilities
Ideal Markdown
Early Markdowns
Markup % of Cost Formula
29. Can be transformed simply and rapidly into cash
Debt Equity Ratio
Late Markdowns
LIFO (last in - first out)
Current Assets
30. Total Markup on all goods on hand/ retail price of all goods on hand
Clearance Markdowns
Markdown Percentage Formula
Early Markdowns
Cumulative Markup % Formula
31. Net dollar markdown/ net dollar selling price
Markdown
Markup % of Cost Formula
Return on Assets
Markdown Percentage Formula
32. Temporary price reduction for a specific period of time for the express purpose of generating store traffic and sales. Prices return to original retail price at end of sale period.
FIFO (First in - First out)
Promotional Markdown
Clearance Markdowns
The Cost Method
33. Evaluates the managament of capital
Return on Sales
5 Steps of Retail Inventory Method
Acid test or Quick Ratio
Acid Test or Quick Ratio (QR) Formula
34. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Profit
Debt Equity Ratio
Pricing Depends on 2 factors
Cost of Goods Sold
35. Current Assets/ Current Liabilities
Current Ratio (CR) Formula
Regular Price
Markdown optimization
Return on Assets
36. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Clearance Markdowns
Current Ratio
Forced Obsolescence
Current Liabilities
37. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Return on Net Worth
Markdown Percentage Formula
Current Ratio (CR) Formula
Markdown
38. Examines the financial health of a retailer - as one of the best indicators of having too much debt in relationship to net worth. Comparres the money that vendors or banks are risking with the money that the retail owners have invested in their opera
Debt Equity Ratio
Pricing Strategies: Price Zones
Price Sensitivity
Debt Equity Ratio Formula
39. Price is changed (up or down)
Original Price
Retail Price Formula
New Price
Pricing Strategies: Price Lining
40. AKA Return on Sales - Profit analysis; Indicates the extend to which retailers have the ability to cover their expenses and earn a profit - as well as a buyers ability to purchase the correct assortment of merchandise
Current Ratio (CR) Formula
Markdown Optimization
Net Sales
Profit Margin
41. Usually lower than original - but held for longer period
Regular Price
Markdown optimization
Buying Errors
FIFO (First in - First out)
42. Merchandise will sell at highest price longer period of time - appear exclusive - sale of goods at regular price is not disrupted - greater amount of goods can be accumulated and then marked down.
Markdown
Cumulative Markup
Late Markdowns
Current Assets
43. Price Lining - price zones - price ranges
Pricing Strategies
Reasons for taking Markdowns
Cumulative Markup
Markdown Optimization
44. Based on a calculation commonly represented as a percentage - comparing the amount of inventory a retailer receives from a manufacturer or supplier against what is actually sold to the consumer
Sell-Through Rate
Balance Sheet
Off-Price Markdowns
Current Ratio
45. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
FIFO (First in - First out)
Fixed Assets
Initial Markup (IMU)
Buying Errors
46. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Off-Price Markdowns
Fixed Liabilities
Retail Price Formula
Operating Expenses
47. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Buying Errors
Operating Expenses
Pricing Depends on 2 factors
Markdown Cancellations
48. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Cumulative Markup
Buying Errors
Operating Expenses
Fixed Liabilities
49. Cost + Markup
Selling Price Formula
Cumulative Markup % Formula
Cumulative Markup
Clearance Markdowns
50. Net Profit After Taxes/ Total Assets
Off-Price Markdown Percentage Formula
Markdown Cancellation ($) Formula
Return on Assets (ROA) Formul
Markdown optimization