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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. (gross margin % x Turnover) / (100%-markup %)
Acid test or Quick Ratio
Loss-Leader
Current Ratio
Gross Margin Return on Inventory Investment-GMROI Formula
2. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Pricing Depends on 2 factors
Markdown Cancellation ($) Formula
Selling Price Formula
Financial Leverage Ratio
3. The awareness of the consumer to what they perceive to be the window of cost within which they will buy a particular product or service
Price Sensitivity
Financial Leverage Ratio
Markdown optimization
Markdown Percentage Formula
4. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Retail Inventory Method
Acid Test or Quick Ratio (QR) Formula
Ideal Markdown
New Price
5. The retailers financial condition at a specific point in time
Balance Sheet
Markdown Optimization
Markdown
Gross Margin
6. The higher the ratio the quicker current liabilities can be paid. This ratio also indicates the margin of safety a retailer has on hand to cover possible shrinkages
Off-Price Markdowns
Current Ratio
Pricing Errors
Pricing Strategies: Price Zones
7. Dollar markup ($)/ cost price ($)
Markdown Cancellations
Promotion Errors
Markup % of Cost Formula
Cost of Goods Sold (COGS) Formula
8. (Cash + Accounts Receivable) / Current Liabilities
Off-Price Markdown Percentage Formula
Acid Test or Quick Ratio (QR) Formula
Original Price
Fixed Liabilities
9. Net dollar markdown/ net dollar selling price
Return on Net Worth (RONW) Formula
Markup
Markdown Percentage Formula
Financial Leverage Ratio Formula
10. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
Pricing Strategies: Price Zones
Accounts Receivable (AR)
Promotional Markdown
11. Current Assets/ Current Liabilities
Current Ratio (CR) Formula
Return on Assets (ROA) Formul
Late Markdowns
Fixed Liabilities
12. Current Liabilites/ Net Worth
Markdown Cancellations
Debt Equity Ratio Formula
Markup % of Cost Formula
Gross Margin
13. Short time - like 1 or 2 day sales
Temporary Price Reduction
Cash Flow Formula
Gross Margin
Assets
14. Total Markup on all goods on hand/ retail price of all goods on hand
Temporary Price Reduction
Net Profit
Retail Price Formula
Cumulative Markup % Formula
15. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
FIFO (First in - First out)
Pricing Depends on 2 factors
Current Ratio
Original Price
16. 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.
Profit Margin
Markdown
Retail Inventory Method
Promotional Markdown
17. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Debt Equity Ratio
Pricing Strategies
Current Ratio
18. 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
Reasons for taking Markdowns
Assets Formula
Early Markdowns
Cost of Goods Sold
19. 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.
Acid Test or Quick Ratio (QR) Formula
Reasons for taking Markdowns
Accounts Receivable (AR)
Net Sales
20. Cost Price/ (100%-markup %)
Retail Price Formula
Selling Price Formula
Inventory
Cost of Goods Sold (COGS) Formula
21. 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
Cash Flow Formula
Selling Price Formula
FIFO (First in - First out)
GMROII (Gross Margin Return on Inventory Investment)
22. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Profit and Loss Statement (P&L Statement)
Markdown
Current Liabilities
23. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
GMROII (Gross Margin Return on Inventory Investment)
Temporary Price Reduction
Retail Inventory Method
24. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Return on Net Worth
LIFO (last in - first out)
Regular Price
25. Costs involved in running the business
Temporary Price Reduction
Regular Price
Operating Expenses
New Price
26. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Return on Assets (ROA) Formul
Turnover Rate Formula
Pricing Strategies: Price Zones
27. Revenues received by a retailer
Cost of Goods Sold
Cumulative Markup
Net Sales
Financial Leverage Ratio
28. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Initial Markup (IMU)
Fixed Assets
Markdown Cancellations
29. 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
Pricing Strategies: Price Lining
Profit
Clearance Markdowns
30. 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
5 Steps of Retail Inventory Method
Fixed Assets
Operating Expenses
Expense Ratio
31. 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.
Markup
Promotional Markdown
Temporary Price Reduction
Late Markdowns
32. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
GMROII (Gross Margin Return on Inventory Investment)
Forced Obsolescence
Off-Price Markdowns
Current Liabilities
33. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Uncontrollable Errors
Liabilities
Depreciation
Cost Complement Formula
34. Sales less cost of goods sold
Markdown optimization
Regular Price
Gross Margin
Pricing Strategies
35. Dollar markup ($)/ retail price ($)
Acid Test or Quick Ratio (QR) Formula
Current Assets
Forced Obsolescence
Markup % of Retail Formula
36. 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)
Pricing Strategies: Price Lining
Clearance Markdowns
Off-Price Markdown Percentage Formula
37. One that is just enough to move the goods
Pricing Strategies: Price Lining
Ideal Markdown
Current Ratio
Financial Leverage Ratio Formula
38. Sales for the period/ average inventory
Turnover Rate Formula
Dollar Markdown Formula
Return on Sales
Expense Ratio
39. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold (COGS) Formula
Fixed Liabilities
Financial Leverage Ratio
GMROII (Gross Margin Return on Inventory Investment)
40. 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
Net Sales
5 Steps of Retail Inventory Method
The Cost Method
Retail Inventory Method
41. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Net Sales
Markdown Percentage
Markdown Cancellation ($) Formula
Return on Net Worth (RONW) Formula
42. Liabilities+ Owner's equity or net worth
Markup % of Cost Formula
Debt Equity Ratio
The Cost Method
Assets Formula
43. Evaluates the managament of capital
Cost Complement Formula
LIFO (last in - first out)
Markup % of Cost Formula
Return on Sales
44. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown
Liabilities
Return on Net Worth
Early Markdowns
45. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Fixed Assets
Profit and Loss Statement (P&L Statement)
Off-Price Markdown Percentage Formula
Gross Margin Return on Inventory Investment-GMROI Formula
46. 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
Forced Obsolescence
Inventory
47. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
Debt Equity Ratio Formula
Markdown Cancellations
Inventory
48. Having the right merchandise - at the right time - for the right price - in the right place
Adage of Profitability for Retailers
FIFO (First in - First out)
Cost of Goods Sold (COGS) Formula
Pricing Strategies: Price Lining
49. The energizing force that fuels and sustains our economic system
Cost of Goods Sold
Off-Price Markdown Percentage Formula
Profit
Promotional Markdown
50. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Cost of Goods Sold
Price Sensitivity
Return on Net Worth
Return on Assets (ROA) Formul