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Test your basic knowledge |
Retail Financials
Start Test
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. Financial debts incurred by a retailer
Profit
Selling Price Formula
Liabilities
Reasons for taking Markdowns
2. First price or Manufacturers suggestet Retal Price (MSRP)
Cost Complement Formula
Original Price
Selling Price Formula
Loss-Leader
3. Usually lower than original - but held for longer period
Regular Price
Balance Sheet
Accounts Receivable (AR)
Retail Inventory Method
4. Promotional markdown that involves selling at or near cost for promotional purposes
Loss-Leader
Assets Formula
Clearance Markdowns
Assets
5. Ensures that there is enough cash to pay debts. Any time the ratio is colse to 1 - the retailer is said to be in a liquid position.
Inventory
Cash Flow Formula
Pricing Strategies: Price Ranges
Acid test or Quick Ratio
6. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Depreciation
Cumulative Markup % Formula
Return on Assets
LIFO (last in - first out)
7. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Pricing Strategies: Price Ranges
Return on Net Worth
Return on Assets
Initial Markup (IMU)
8. Short time - like 1 or 2 day sales
Temporary Price Reduction
Return on Net Worth (RONW) Formula
Early Markdowns
Late Markdowns
9. 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.
Cost of Goods Sold
Markdown Cancellation ($) Formula
Profit
Markup
10. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Expense Ratio
Dollar Markdown Formula
Markdown optimization
Profit Margin Analysis Formula
11. Total Assets/ Net Worth
FIFO (First in - First out)
Pricing Strategies: Price Zones
Financial Leverage Ratio Formula
Return on Net Worth
12. 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
Accounts Receivable (AR)
Current Ratio
Gross Margin Return on Inventory Investment-GMROI Formula
Return on Assets
13. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Planned Initial Markup % Formula
Current Liabilities
Ideal Markdown
14. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Return on Sales
Uncontrollable Errors
Markdown Cancellations
Cost Complement Formula
15. 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
Cost Complement Formula
Clearance Markdowns
Debt Equity Ratio Formula
Depreciation
16. 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
Cost of Goods Sold (COGS) Formula
Cumulative Markup
The Cost Method
Markdown optimization
17. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Retail Inventory Method
Fixed Liabilities
Cost Complement Formula
Buying Errors
18. Priced too high initially - priced too low - selling price of competitors
New Price
Pricing Errors
Liabilities
Uncontrollable Errors
19. Price Lining - price zones - price ranges
Pricing Strategies
Depreciation
Profit Margin Analysis Formula
Markdown Cancellation ($) Formula
20. Improper displays - merchandise returns due to high pressure selling
Pricing Strategies
Net Profit
Reasons for taking Markdowns
Promotion Errors
21. The prices from lowest to highest that are carried within a merchandise category
Debt Equity Ratio Formula
Uncontrollable Errors
Pricing Strategies: Price Ranges
Cost of Goods Sold
22. 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 Percentage Formula
Financial Leverage Ratio
Expense Ratio
Late Markdowns
23. (gross margin % x Turnover) / (100%-markup %)
Planned Initial Markup % Formula
Price Sensitivity
Gross Margin Return on Inventory Investment-GMROI Formula
Balance Sheet
24. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Markdown Percentage
Expense Ratio Formula
Cash Flow Formula
Net Profit
25. Cost + Markup
Markdown optimization
Selling Price Formula
Gross Margin
Sell-Through Rate
26. Price is changed (up or down)
New Price
Off-Price Markdown Percentage Formula
Current Assets
Depreciation
27. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdown Percentage Formula
Cost of Goods Sold (COGS) Formula
Buying Errors
Off-Price Markdowns
28. What the retailer owns in monetary value
Assets
Return on Assets (ROA) Formul
Debt Equity Ratio Formula
Cumulative Markup
29. The weather - merchandise is shopworn - economic downturn
Adage of Profitability for Retailers
Uncontrollable Errors
Profit
Pricing Strategies: Price Ranges
30. 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
Assets
Cumulative Markup % Formula
Fixed Assets
31. Indicates gross margin derived from the sales of merchandise and it's ability to cover operating expenses. Helps a retailer determine how much rent they should pay - what salary the owner should draw - and how much they should pay their associates.
Retail Inventory Method
Expense Ratio
LIFO (last in - first out)
Current Ratio
32. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Markup % of Cost Formula
Off-Price Markdown Percentage Formula
Net Sales
Profit Margin
33. 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
Liabilities
Selling Price Formula
Profit and Loss Statement (P&L Statement)
GMROII (Gross Margin Return on Inventory Investment)
34. Net Profit After Taxes/ Net Worth
Profit
Profit Margin
Return on Net Worth (RONW) Formula
Promotional Markdown
35. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Accounts Receivable (AR)
Profit Margin Analysis Formula
Markdown Percentage
36. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Markdown Percentage Formula
Pricing Strategies: Price Lining
Cost Complement Formula
Initial Markup (IMU)
37. The energizing force that fuels and sustains our economic system
Initial Markup (IMU)
Accounts Receivable (AR)
Expense Ratio
Profit
38. 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
Profit Margin
Late Markdowns
Assets Formula
Markdown Optimization
39. Dollar markup ($)/ retail price ($)
Debt Equity Ratio Formula
Markup % of Retail Formula
Price Sensitivity
Pricing Depends on 2 factors
40. Revenues received by a retailer
Net Sales
Current Ratio (CR) Formula
Balance Sheet
Markdown optimization
41. Evaluates the managament of capital
Off-Price Markdown Percentage Formula
Return on Sales
Planned Initial Markup % Formula
Inventory
42. Having the right merchandise - at the right time - for the right price - in the right place
Adage of Profitability for Retailers
Loss-Leader
Fixed Assets
GMROII (Gross Margin Return on Inventory Investment)
43. Original Retail price- markdown selling price
Dollar Markdown Formula
Profit
Return on Sales
Cumulative Markup % Formula
44. (Cash + Accounts Receivable) / Current Liabilities
Markdown optimization
Acid Test or Quick Ratio (QR) Formula
Markup % of Retail Formula
Markup % of Cost Formula
45. In Cost Method. Merchandise sold during a time period is assumed to be sold in the order the merchandise was received. Merchandise on hand for the longest period of time is sold first. Therefore - the ending inventory reflects the items in stock for
Pricing Strategies
Sell-Through Rate
FIFO (First in - First out)
Financial Leverage Ratio Formula
46. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Depreciation
Selling Price Formula
Markdown Cancellation ($) Formula
Pricing Strategies: Price Lining
47. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Current Assets
Markdown
Clearance Markdowns
48. The awareness of the consumer to what they perceive to be the window of cost within which they will buy a particular product or service
Price Sensitivity
Clearance Markdowns
LIFO (last in - first out)
Buying Errors
49. The number of items remaining in stock x dollar markdown
Cost of Goods Sold (COGS) Formula
Profit Margin
Markdown Cancellation ($) Formula
Original Price
50. Current Liabilites/ Net Worth
Debt Equity Ratio
Initial Markup (IMU)
Return on Sales
Debt Equity Ratio Formula