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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. 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.
Sell-Through Rate
Reasons for taking Markdowns
Acid test or Quick Ratio
Current Assets
2. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Profit Margin
Markdown Percentage
Acid test or Quick Ratio
Markdown Cancellations
3. 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.
Retail Inventory Method
Initial Markup (IMU)
Late Markdowns
Markdown Cancellations
4. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Pricing Strategies: Price Ranges
Selling Price Formula
Off-Price Markdown Percentage Formula
Debt Equity Ratio Formula
5. Promotional markdown that involves selling at or near cost for promotional purposes
Cumulative Markup % Formula
Depreciation
Financial Leverage Ratio
Loss-Leader
6. Liabilities+ Owner's equity or net worth
Assets Formula
Early Markdowns
Debt Equity Ratio
Acid test or Quick Ratio
7. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Current Liabilities
Pricing Strategies: Price Ranges
Initial Markup (IMU)
Debt Equity Ratio
8. Dollar markup ($)/ cost price ($)
Cash Flow Formula
Markup % of Cost Formula
Late Markdowns
Depreciation
9. 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
Markdown optimization
Return on Sales
Price Sensitivity
Financial Leverage Ratio
10. Cost + Markup
Cash Flow Formula
Gross Margin
Pricing Depends on 2 factors
Selling Price Formula
11. 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
Loss-Leader
Depreciation
Profit Margin
Current Ratio
12. Price Lining - price zones - price ranges
Early Markdowns
Price Sensitivity
Pricing Strategies
Off-Price Markdown Percentage Formula
13. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Cost Complement Formula
Profit Margin
Net Profit
14. 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
Profit
The Cost Method
Net Profit
Initial Markup (IMU)
15. 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
Clearance Markdowns
Adage of Profitability for Retailers
Cumulative Markup % Formula
Pricing Depends on 2 factors
16. Having the right merchandise - at the right time - for the right price - in the right place
GMROII (Gross Margin Return on Inventory Investment)
Profit and Loss Statement (P&L Statement)
Return on Sales
Adage of Profitability for Retailers
17. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Return on Net Worth
Markdown Cancellation ($) Formula
The Cost Method
Markdown
18. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Accounts Receivable (AR)
Markdown Cancellations
Cost of Goods Sold (COGS) Formula
19. The retailers financial condition at a specific point in time
Markdown Percentage Formula
Sell-Through Rate
FIFO (First in - First out)
Balance Sheet
20. Evaluates the managament of capital
Return on Sales
Promotion Errors
Fixed Liabilities
Return on Net Worth
21. Net dollar markdown/ net dollar selling price
Cost of Goods Sold (COGS) Formula
Late Markdowns
Expense Ratio Formula
Markdown Percentage Formula
22. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Cash Flow Formula
Ideal Markdown
Fixed Liabilities
Dollar Markdown Formula
23. In Cost Method. Merchandise sold during a time period is assumed to be sold in the order the merchandise was received. Merchandise on hand for the longest period of time is sold first. Therefore - the ending inventory reflects the items in stock for
Markup % of Cost Formula
Markdown Cancellations
FIFO (First in - First out)
Net Profit
24. Price is changed (up or down)
LIFO (last in - first out)
New Price
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Errors
25. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Buying Errors
Acid Test or Quick Ratio (QR) Formula
Pricing Depends on 2 factors
Sell-Through Rate
26. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Pricing Strategies: Price Zones
Current Ratio
Pricing Strategies: Price Lining
27. Basic premise is to increase profits through more sales without an increase in inventory. Inventory is expressed in cost terms rather than cost percent - because it is related to investment dollars in gross margin - it should be expressed in cost num
Loss-Leader
GMROII (Gross Margin Return on Inventory Investment)
LIFO (last in - first out)
Temporary Price Reduction
28. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold (COGS) Formula
Retail Price Formula
Markup % of Retail Formula
Markup % of Cost Formula
29. Net Profit/ Net Sales
Gross Margin
New Price
Expense Ratio
Profit Margin Analysis Formula
30. First price or Manufacturers suggestet Retal Price (MSRP)
Profit and Loss Statement (P&L Statement)
Original Price
Pricing Errors
Sell-Through Rate
31. The higher the ratio the quicker current liabilities can be paid. This ratio also indicates the margin of safety a retailer has on hand to cover possible shrinkages
Current Ratio
Net Sales
Accounts Receivable (AR)
Financial Leverage Ratio Formula
32. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Return on Net Worth
Price Sensitivity
Markdown Percentage Formula
33. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Markup % of Retail Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Selling Price Formula
34. Sales for the period/ average inventory
Markdown Cancellation ($) Formula
Cumulative Markup % Formula
Fixed Liabilities
Turnover Rate Formula
35. Total Assets/ Net Worth
Ideal Markdown
Financial Leverage Ratio Formula
Selling Price Formula
Debt Equity Ratio Formula
36. The number of items remaining in stock x dollar markdown
Pricing Strategies: Price Lining
Return on Net Worth
Temporary Price Reduction
Markdown Cancellation ($) Formula
37. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Pricing Depends on 2 factors
Acid test or Quick Ratio
Markdown Cancellations
Reasons for taking Markdowns
38. 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
Early Markdowns
Promotional Markdown
Gross Margin
Pricing Strategies
39. The cost of merchandise that was sold (including the method that was used to determine cost)
Fixed Assets
Reasons for taking Markdowns
Assets
Cost of Goods Sold
40. Net Profit After Taxes/ Net Worth
Temporary Price Reduction
Return on Net Worth (RONW) Formula
Net Sales
Markdown
41. (gross margin % x Turnover) / (100%-markup %)
Pricing Strategies: Price Zones
Profit
Markdown Percentage Formula
Gross Margin Return on Inventory Investment-GMROI Formula
42. 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
Fixed Liabilities
Profit and Loss Statement (P&L Statement)
Sell-Through Rate
Selling Price Formula
43. Total Markup on all goods on hand/ retail price of all goods on hand
Accounts Receivable (AR)
Late Markdowns
Cumulative Markup % Formula
Depreciation
44. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Ideal Markdown
Markdown Optimization
Cumulative Markup % Formula
Selling Price Formula
45. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Markdown Cancellations
Clearance Markdowns
Expense Ratio
Cost Complement Formula
46. Improper displays - merchandise returns due to high pressure selling
Off-Price Markdowns
Current Ratio
Sell-Through Rate
Promotion Errors
47. Can be transformed simply and rapidly into cash
Pricing Depends on 2 factors
Markdown Percentage Formula
Current Assets
Markup % of Cost Formula
48. 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
Expense Ratio
Net Sales
Markdown
49. One that is just enough to move the goods
Markdown
Inventory
Ideal Markdown
Current Ratio
50. 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.
Current Ratio (CR) Formula
Current Ratio
Cost Complement Formula
Inventory