Test your basic knowledge |

Retail Financials

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. 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






2. Short time - like 1 or 2 day sales






3. 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






4. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.






5. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.






6. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)






7. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes






8. Dollar markup ($)/ retail price ($)






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






10. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)






11. 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






12. Current Assets/ Current Liabilities






13. 1. Determine merchandise available for sale at both cost and retail prices. 2.Calculate the cost to retail complement or percentage relationship of the cost of merchandise to the selling price. 3. Subtract markdowns taken during the period. 4. Determ






14. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise






15. 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






16. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item






17. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model






18. Can be transformed simply and rapidly into cash






19. Costs involved in running the business






20. What the retailer owns in monetary value






21. Total Expenses/ Net Sales






22. Merchandise Available for sale at cost/ Merchandise available for sale at retail






23. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.






24. Buying errors - promotion errors - pricing errors - uncontrollable errors






25. (gross margin % x Turnover) / (100%-markup %)






26. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down






27. 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.






28. The retailers financial condition at a specific point in time






29. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit






30. Sales less cost of goods sold






31. 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.






32. One that is just enough to move the goods






33. Liabilities+ Owner's equity or net worth






34. The prices from lowest to highest that are carried within a merchandise category






35. Dollar markup ($)/ cost price ($)






36. Evaluates the managament of capital






37. 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.






38. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down






39. Price Lining - price zones - price ranges






40. Total Assets/ Net Worth






41. 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






42. 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






43. 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.






44. Usually lower than original - but held for longer period






45. Net Profit/ Net Sales






46. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory






47. Revenues received by a retailer






48. 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.






49. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.






50. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.