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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. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Cost Complement Formula
Regular Price
Return on Net Worth
2. 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
FIFO (First in - First out)
Promotion Errors
Gross Margin
Early Markdowns
3. Dollar markup ($)/ cost price ($)
Liabilities
Expense Ratio Formula
Markup % of Cost Formula
Return on Sales
4. Net Profit/ Net Sales
Adage of Profitability for Retailers
Current Ratio (CR) Formula
Profit Margin Analysis Formula
Original Price
5. Net dollar markdown/ net dollar selling price
Early Markdowns
Markdown Percentage Formula
Gross Margin
Depreciation
6. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Markup % of Cost Formula
Assets Formula
Markdown
7. Cash Received by the retailer-cash leaving the retailer
Temporary Price Reduction
Markup % of Cost Formula
Profit
Cash Flow Formula
8. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Expense Ratio
Acid Test or Quick Ratio (QR) Formula
Markup
9. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Pricing Depends on 2 factors
Accounts Receivable (AR)
Off-Price Markdowns
Operating Expenses
10. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Promotion Errors
Off-Price Markdown Percentage Formula
Markdown Cancellation ($) Formula
Initial Markup (IMU)
11. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Gross Margin Return on Inventory Investment-GMROI Formula
Current Assets
Retail Inventory Method
Financial Leverage Ratio Formula
12. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Financial Leverage Ratio
Markdown Optimization
Markdown Percentage Formula
Current Ratio
13. Ensures that there is enough cash to pay debts. Any time the ratio is colse to 1 - the retailer is said to be in a liquid position.
Acid test or Quick Ratio
Markdown Cancellation ($) Formula
Sell-Through Rate
Cash Flow Formula
14. 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.
Profit and Loss Statement (P&L Statement)
Profit Margin
Pricing Strategies
Accounts Receivable (AR)
15. Dollar markup ($)/ retail price ($)
Cost Complement Formula
Regular Price
Markup % of Retail Formula
Gross Margin Return on Inventory Investment-GMROI Formula
16. Current Assets/ Current Liabilities
Current Ratio (CR) Formula
Pricing Strategies: Price Ranges
Cost of Goods Sold
Turnover Rate Formula
17. Improper displays - merchandise returns due to high pressure selling
Expense Ratio Formula
Pricing Strategies
Turnover Rate Formula
Promotion Errors
18. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Acid Test or Quick Ratio (QR) Formula
Regular Price
Profit and Loss Statement (P&L Statement)
19. 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
Net Profit
Fixed Assets
Markdown optimization
Debt Equity Ratio
20. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Pricing Errors
Financial Leverage Ratio Formula
Temporary Price Reduction
21. 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.
Return on Assets
Markdown Optimization
Assets Formula
Markup
22. Usually lower than original - but held for longer period
Off-Price Markdown Percentage Formula
Regular Price
Buying Errors
Markdown
23. Promotional markdown that involves selling at or near cost for promotional purposes
Late Markdowns
Pricing Strategies: Price Lining
Loss-Leader
Planned Initial Markup % Formula
24. Cost + Markup
Markup % of Cost Formula
Selling Price Formula
Regular Price
Pricing Strategies: Price Lining
25. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Temporary Price Reduction
Net Profit
Return on Net Worth
26. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown
Inventory
Planned Initial Markup % Formula
Early Markdowns
27. Having the right merchandise - at the right time - for the right price - in the right place
Price Sensitivity
Debt Equity Ratio
Dollar Markdown Formula
Adage of Profitability for Retailers
28. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
GMROII (Gross Margin Return on Inventory Investment)
Cost of Goods Sold
Net Profit
Cumulative Markup
29. 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.
Return on Assets (ROA) Formul
Profit Margin
Original Price
Late Markdowns
30. Total Expenses/ Net Sales
Balance Sheet
Inventory
Expense Ratio Formula
Acid test or Quick Ratio
31. 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
The Cost Method
Retail Inventory Method
Markdown optimization
Financial Leverage Ratio Formula
32. 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
Promotional Markdown
5 Steps of Retail Inventory Method
Original Price
Forced Obsolescence
33. Can be transformed simply and rapidly into cash
Profit Margin
Current Assets
Current Liabilities
Cost Complement Formula
34. Liabilities+ Owner's equity or net worth
Assets Formula
Cost Complement Formula
Inventory
Net Profit
35. Sales for the period/ average inventory
Accounts Receivable (AR)
Assets Formula
Selling Price Formula
Turnover Rate Formula
36. Evaluates the managament of capital
Return on Sales
Pricing Strategies: Price Ranges
Promotional Markdown
Return on Net Worth
37. 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.
Pricing Errors
Financial Leverage Ratio Formula
Expense Ratio
Fixed Assets
38. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
Cumulative Markup % Formula
Markdown Cancellations
Cash Flow Formula
39. Ranges of prices that appeals for a particular group of consumers
Markdown Percentage
Pricing Strategies: Price Zones
Liabilities
Pricing Strategies: Price Ranges
40. Temporary price reduction for a specific period of time for the express purpose of generating store traffic and sales. Prices return to original retail price at end of sale period.
Promotional Markdown
Regular Price
Return on Sales
Promotion Errors
41. Basic premise is to increase profits through more sales without an increase in inventory. Inventory is expressed in cost terms rather than cost percent - because it is related to investment dollars in gross margin - it should be expressed in cost num
GMROII (Gross Margin Return on Inventory Investment)
Profit Margin
Fixed Liabilities
Assets Formula
42. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Markdown optimization
Financial Leverage Ratio Formula
Pricing Strategies: Price Zones
Buying Errors
43. Priced too high initially - priced too low - selling price of competitors
Forced Obsolescence
Pricing Errors
Cumulative Markup % Formula
FIFO (First in - First out)
44. Price is changed (up or down)
Cost Complement Formula
Net Profit
New Price
Markdown Cancellation ($) Formula
45. The retailers financial condition at a specific point in time
Profit and Loss Statement (P&L Statement)
Cumulative Markup % Formula
Balance Sheet
Acid Test or Quick Ratio (QR) Formula
46. Total Markup on all goods on hand/ retail price of all goods on hand
Liabilities
LIFO (last in - first out)
Adage of Profitability for Retailers
Cumulative Markup % Formula
47. Financial debts incurred by a retailer
Profit Margin Analysis Formula
Selling Price Formula
Liabilities
Markdown Cancellations
48. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Debt Equity Ratio
Cash Flow Formula
Markdown optimization
Profit and Loss Statement (P&L Statement)
49. 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
Reasons for taking Markdowns
Temporary Price Reduction
Dollar Markdown Formula
Current Ratio
50. Cost Price/ (100%-markup %)
Cumulative Markup % Formula
Markdown Percentage
GMROII (Gross Margin Return on Inventory Investment)
Retail Price Formula
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