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Test your basic knowledge |
Retail Financials
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. 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
Current Liabilities
Selling Price Formula
LIFO (last in - first out)
2. 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
FIFO (First in - First out)
Markup % of Cost Formula
Markup
Markdown optimization
3. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Adage of Profitability for Retailers
Cumulative Markup
Cost of Goods Sold (COGS) Formula
Current Assets
4. 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.
Expense Ratio
Markdown Optimization
Pricing Strategies
Pricing Strategies: Price Ranges
5. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Expense Ratio
Accounts Receivable (AR)
Clearance Markdowns
6. (Cash + Accounts Receivable) / Current Liabilities
Adage of Profitability for Retailers
Gross Margin
Return on Assets (ROA) Formul
Acid Test or Quick Ratio (QR) Formula
7. 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.
Operating Expenses
Late Markdowns
Markdown Cancellations
Return on Net Worth
8. (gross margin % x Turnover) / (100%-markup %)
Expense Ratio Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Strategies: Price Ranges
Acid test or Quick Ratio
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.
Debt Equity Ratio Formula
Cost of Goods Sold
Cash Flow Formula
Markdown Optimization
10. Price is changed (up or down)
Liabilities
New Price
Fixed Liabilities
Markdown Cancellations
11. What the retailer owns in monetary value
Pricing Strategies: Price Zones
Ideal Markdown
Acid Test or Quick Ratio (QR) Formula
Assets
12. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown Percentage
Markdown
Markup
Fixed Assets
13. Buying errors - promotion errors - pricing errors - uncontrollable errors
Expense Ratio Formula
Regular Price
Reasons for taking Markdowns
Fixed Assets
14. Net dollar markdown/ net dollar selling price
Liabilities
Markdown Percentage Formula
Reasons for taking Markdowns
GMROII (Gross Margin Return on Inventory Investment)
15. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Pricing Strategies: Price Zones
Markdown Percentage Formula
Net Profit
16. Price Lining - price zones - price ranges
Pricing Strategies
Promotion Errors
Late Markdowns
Financial Leverage Ratio Formula
17. Cash Received by the retailer-cash leaving the retailer
Pricing Errors
Retail Inventory Method
Cash Flow Formula
Dollar Markdown Formula
18. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Ideal Markdown
Cumulative Markup
Buying Errors
Temporary Price Reduction
19. Usually lower than original - but held for longer period
Regular Price
Cost of Goods Sold
5 Steps of Retail Inventory Method
GMROII (Gross Margin Return on Inventory Investment)
20. Sales less cost of goods sold
Gross Margin
Markdown Percentage Formula
Current Ratio
Original Price
21. 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.
Price Sensitivity
Return on Net Worth
Accounts Receivable (AR)
Cumulative Markup
22. 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.
Inventory
Markdown Cancellation ($) Formula
Cost of Goods Sold (COGS) Formula
Balance Sheet
23. Amount of markdown usually less - take the loss early will be easier - strengthen goodwill - replenish stock in lower price lines - leads to higher stock turnover - higher likelihood merchandise will sell in a timely manner
Operating Expenses
Net Profit
Return on Net Worth
Early Markdowns
24. Sales for the period/ average inventory
Turnover Rate Formula
Retail Inventory Method
Markdown Percentage
Pricing Strategies: Price Ranges
25. Can be transformed simply and rapidly into cash
Clearance Markdowns
Turnover Rate Formula
Cost of Goods Sold (COGS) Formula
Current Assets
26. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Profit Margin
LIFO (last in - first out)
Fixed Liabilities
Forced Obsolescence
27. The energizing force that fuels and sustains our economic system
Return on Assets (ROA) Formul
Profit
Markdown Cancellations
Expense Ratio
28. The awareness of the consumer to what they perceive to be the window of cost within which they will buy a particular product or service
Markup
Pricing Depends on 2 factors
Depreciation
Price Sensitivity
29. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Markup % of Cost Formula
Depreciation
Dollar Markdown Formula
5 Steps of Retail Inventory Method
30. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Liabilities
Adage of Profitability for Retailers
Return on Assets
Markdown Cancellation ($) Formula
31. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Return on Net Worth (RONW) Formula
Return on Net Worth
Net Sales
Cumulative Markup
32. Net Profit After Taxes/ Total Assets
Return on Assets (ROA) Formul
Selling Price Formula
Sell-Through Rate
Markup
33. Total Assets/ Net Worth
Planned Initial Markup % Formula
Financial Leverage Ratio Formula
Current Ratio
Promotion Errors
34. Total Expenses/ Net Sales
Gross Margin
Net Sales
Expense Ratio Formula
Original Price
35. The retailers financial condition at a specific point in time
Financial Leverage Ratio
Clearance Markdowns
Liabilities
Balance Sheet
36. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Initial Markup (IMU)
LIFO (last in - first out)
Cost of Goods Sold
Financial Leverage Ratio
37. Liabilities+ Owner's equity or net worth
GMROII (Gross Margin Return on Inventory Investment)
Acid test or Quick Ratio
Cost of Goods Sold (COGS) Formula
Assets Formula
38. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Profit and Loss Statement (P&L Statement)
5 Steps of Retail Inventory Method
Cost Complement Formula
Dollar Markdown Formula
39. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Return on Net Worth (RONW) Formula
Clearance Markdowns
Cumulative Markup
40. Cost + Markup
Cost of Goods Sold (COGS) Formula
Promotional Markdown
Selling Price Formula
Pricing Strategies: Price Ranges
41. Current Assets/ Current Liabilities
Profit and Loss Statement (P&L Statement)
Temporary Price Reduction
Gross Margin
Current Ratio (CR) Formula
42. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Pricing Errors
Current Assets
Return on Assets (ROA) Formul
Current Liabilities
43. Evaluates the managament of capital
Gross Margin
Return on Sales
Cumulative Markup % Formula
Markdown Optimization
44. Ranges of prices that appeals for a particular group of consumers
LIFO (last in - first out)
FIFO (First in - First out)
Pricing Strategies: Price Zones
Liabilities
45. Promotional markdown that involves selling at or near cost for promotional purposes
Loss-Leader
Turnover Rate Formula
Reasons for taking Markdowns
Buying Errors
46. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Cost Complement Formula
Late Markdowns
Inventory
47. 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
Cumulative Markup
Operating Expenses
Profit and Loss Statement (P&L Statement)
Sell-Through Rate
48. Short time - like 1 or 2 day sales
Cash Flow Formula
Net Sales
Buying Errors
Temporary Price Reduction
49. 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
Markup % of Retail Formula
Current Ratio (CR) Formula
Planned Initial Markup % Formula
GMROII (Gross Margin Return on Inventory Investment)
50. Priced too high initially - priced too low - selling price of competitors
Cash Flow Formula
Reasons for taking Markdowns
Pricing Errors
Assets
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