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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. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Profit and Loss Statement (P&L Statement)
Sell-Through Rate
Off-Price Markdown Percentage Formula
Retail Inventory Method
2. Priced too high initially - priced too low - selling price of competitors
Inventory
Markdown Percentage Formula
Off-Price Markdown Percentage Formula
Pricing Errors
3. Can be transformed simply and rapidly into cash
Markdown optimization
Current Assets
Markdown
Operating Expenses
4. 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
Current Ratio (CR) Formula
Liabilities
The Cost Method
Inventory
5. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Fixed Assets
Profit Margin Analysis Formula
5 Steps of Retail Inventory Method
Fixed Liabilities
6. In the Cost Method. Merchandise most recently purchased is assumed to have been sold first. Therefore - the ending inventory reflects the items in stock for the longest period of time. Produces lowest ending inventory value and highest cost of goods
Cash Flow Formula
Early Markdowns
Off-Price Markdowns
LIFO (last in - first out)
7. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Current Ratio
Turnover Rate Formula
Return on Assets (ROA) Formul
8. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Regular Price
Return on Sales
Pricing Errors
9. The retailers financial condition at a specific point in time
Reasons for taking Markdowns
Return on Net Worth (RONW) Formula
Initial Markup (IMU)
Balance Sheet
10. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Net Sales
Current Ratio
Return on Assets
Assets Formula
11. 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.
Acid test or Quick Ratio
Fixed Liabilities
Current Liabilities
Inventory
12. Price is changed (up or down)
Accounts Receivable (AR)
Markup % of Retail Formula
Regular Price
New Price
13. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Strategies: Price Lining
Markdown Cancellations
Pricing Depends on 2 factors
Off-Price Markdown Percentage Formula
14. 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.
Gross Margin
Financial Leverage Ratio Formula
Pricing Strategies: Price Zones
Promotional Markdown
15. Ranges of prices that appeals for a particular group of consumers
Retail Inventory Method
Profit and Loss Statement (P&L Statement)
Sell-Through Rate
Pricing Strategies: Price Zones
16. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Off-Price Markdown Percentage Formula
Current Liabilities
Expense Ratio Formula
Temporary Price Reduction
17. 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
Retail Price Formula
Cost of Goods Sold (COGS) Formula
GMROII (Gross Margin Return on Inventory Investment)
Expense Ratio
18. Sales less cost of goods sold
Gross Margin
Markup % of Cost Formula
Turnover Rate Formula
Temporary Price Reduction
19. 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
Return on Sales
Profit Margin Analysis Formula
Sell-Through Rate
Retail Price Formula
20. Dollar markup ($)/ cost price ($)
Markdown Cancellations
5 Steps of Retail Inventory Method
Cost Complement Formula
Markup % of Cost Formula
21. Short time - like 1 or 2 day sales
Uncontrollable Errors
Temporary Price Reduction
Pricing Errors
Markup
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.
Gross Margin
Regular Price
Sell-Through Rate
Late Markdowns
23. The number of items remaining in stock x dollar markdown
Off-Price Markdowns
Markdown Cancellation ($) Formula
Financial Leverage Ratio
Net Profit
24. What the retailer owns in monetary value
Assets
Return on Assets (ROA) Formul
Current Ratio (CR) Formula
Markdown Optimization
25. Price reduction for merchandise that has not lived up to buyers' expectations. Includes broken assortments of merchandise - merchandise lines that buyers no longer want to carry - shopworn goods - items that haven't sold because of an event beyond bu
Temporary Price Reduction
Fixed Assets
Clearance Markdowns
Cash Flow Formula
26. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Return on Net Worth
Adage of Profitability for Retailers
Expense Ratio Formula
Forced Obsolescence
27. Assets collected within one year. Due to the widespread use of credit cards - AR for retailers has diminished with exceptions such as lay-a-way.
Dollar Markdown Formula
LIFO (last in - first out)
Accounts Receivable (AR)
Markdown Cancellations
28. (planned expenses + planned operating profit + planned stock shortages + markdowns + employee and customer discounts) / (planned net sales + stock shortages + markdowns + employee and customer discounts) x 100%
Early Markdowns
Gross Margin
Planned Initial Markup % Formula
Markdown Cancellation ($) Formula
29. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Liabilities
Fixed Liabilities
Cumulative Markup % Formula
Markdown
30. 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.
Markdown Percentage Formula
Regular Price
Promotional Markdown
Expense Ratio
31. 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
Pricing Strategies: Price Lining
Promotional Markdown
Profit Margin
Accounts Receivable (AR)
32. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Profit
Forced Obsolescence
Dollar Markdown Formula
Initial Markup (IMU)
33. Net Profit/ Net Sales
Adage of Profitability for Retailers
Profit Margin Analysis Formula
Financial Leverage Ratio
Buying Errors
34. The weather - merchandise is shopworn - economic downturn
Return on Assets (ROA) Formul
Debt Equity Ratio Formula
Uncontrollable Errors
Expense Ratio Formula
35. Original Retail price- markdown selling price
Selling Price Formula
Ideal Markdown
Dollar Markdown Formula
Pricing Strategies: Price Ranges
36. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Cumulative Markup % Formula
Profit and Loss Statement (P&L Statement)
Ideal Markdown
Assets
37. Cost + Markup
Acid test or Quick Ratio
Pricing Strategies: Price Zones
Cost of Goods Sold (COGS) Formula
Selling Price Formula
38. The largest sum of money in current assets. Can be presented in either cost or retail terms. Should be purchased for a short period of time - as products lose monetary value over time and are subject to markdowns.
Cost of Goods Sold
Liabilities
Operating Expenses
Inventory
39. Current Assets/ Current Liabilities
Planned Initial Markup % Formula
Debt Equity Ratio Formula
Current Ratio (CR) Formula
Pricing Strategies
40. Financial debts incurred by a retailer
Current Ratio
Uncontrollable Errors
Balance Sheet
Liabilities
41. Net dollar markdown/ net dollar selling price
Retail Inventory Method
Forced Obsolescence
Markdown Percentage Formula
Gross Margin Return on Inventory Investment-GMROI Formula
42. Having the right merchandise - at the right time - for the right price - in the right place
Ideal Markdown
Selling Price Formula
Current Assets
Adage of Profitability for Retailers
43. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Planned Initial Markup % Formula
Accounts Receivable (AR)
Pricing Depends on 2 factors
44. Cash Received by the retailer-cash leaving the retailer
Markdown optimization
Turnover Rate Formula
Debt Equity Ratio Formula
Cash Flow Formula
45. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Sell-Through Rate
Selling Price Formula
Planned Initial Markup % Formula
46. Price Lining - price zones - price ranges
Markdown Cancellations
Expense Ratio
Gross Margin
Pricing Strategies
47. 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
Acid test or Quick Ratio
FIFO (First in - First out)
Net Profit
Markdown optimization
48. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Debt Equity Ratio Formula
Markdown optimization
Operating Expenses
Profit
49. 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
Loss-Leader
Debt Equity Ratio
Financial Leverage Ratio Formula
Gross Margin
50. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Fixed Liabilities
Assets
Financial Leverage Ratio Formula