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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. Dollar markup ($)/ retail price ($)
Profit Margin
Markup % of Retail Formula
Markdown Percentage Formula
Net Sales
2. Price is changed (up or down)
Clearance Markdowns
New Price
Promotional Markdown
Pricing Depends on 2 factors
3. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Gross Margin
Promotion Errors
Initial Markup (IMU)
4. 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.
Temporary Price Reduction
Pricing Depends on 2 factors
Markdown Percentage Formula
Inventory
5. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Off-Price Markdowns
Buying Errors
Operating Expenses
6. Net dollar markdown/ net dollar selling price
Sell-Through Rate
Markdown Percentage Formula
Adage of Profitability for Retailers
Fixed Assets
7. 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
Selling Price Formula
Financial Leverage Ratio
Pricing Strategies: Price Ranges
Clearance Markdowns
8. 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
Sell-Through Rate
Selling Price Formula
Ideal Markdown
Reasons for taking Markdowns
9. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Original Price
Markup
Cost Complement Formula
Markup % of Retail Formula
10. Total Expenses/ Net Sales
Planned Initial Markup % Formula
Adage of Profitability for Retailers
Expense Ratio Formula
Promotion Errors
11. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Selling Price Formula
Uncontrollable Errors
Markdown optimization
Pricing Strategies: Price Lining
12. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Initial Markup (IMU)
Current Ratio
Current Liabilities
Return on Net Worth (RONW) Formula
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.
Cumulative Markup % Formula
Regular Price
Net Sales
Acid test or Quick Ratio
14. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Buying Errors
Return on Net Worth
Price Sensitivity
15. One that is just enough to move the goods
Depreciation
Assets Formula
Ideal Markdown
Pricing Strategies
16. Current Assets/ Current Liabilities
Markup % of Cost Formula
Current Ratio (CR) Formula
Adage of Profitability for Retailers
Initial Markup (IMU)
17. Promotional markdown that involves selling at or near cost for promotional purposes
Fixed Assets
Current Assets
Loss-Leader
GMROII (Gross Margin Return on Inventory Investment)
18. Cash Received by the retailer-cash leaving the retailer
Fixed Liabilities
Profit and Loss Statement (P&L Statement)
Pricing Strategies: Price Lining
Cash Flow Formula
19. Costs involved in running the business
Retail Inventory Method
Planned Initial Markup % Formula
Pricing Strategies: Price Zones
Operating Expenses
20. 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
Late Markdowns
Profit and Loss Statement (P&L Statement)
GMROII (Gross Margin Return on Inventory Investment)
Temporary Price Reduction
21. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Current Assets
Markdown optimization
Original Price
22. Short time - like 1 or 2 day sales
Retail Price Formula
Temporary Price Reduction
Ideal Markdown
Acid Test or Quick Ratio (QR) Formula
23. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Return on Net Worth
Profit Margin Analysis Formula
Financial Leverage Ratio Formula
24. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Current Liabilities
Pricing Depends on 2 factors
Off-Price Markdown Percentage Formula
Fixed Assets
25. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Depreciation
Retail Price Formula
Return on Assets
Debt Equity Ratio
26. The cost of merchandise that was sold (including the method that was used to determine cost)
Markdown Cancellation ($) Formula
Profit and Loss Statement (P&L Statement)
Cost of Goods Sold
Markup % of Cost Formula
27. Cost Price/ (100%-markup %)
Regular Price
Financial Leverage Ratio Formula
Sell-Through Rate
Retail Price Formula
28. Price Lining - price zones - price ranges
Pricing Strategies
Debt Equity Ratio
Expense Ratio
Accounts Receivable (AR)
29. Sales for the period/ average inventory
Pricing Strategies: Price Lining
Return on Assets
Reasons for taking Markdowns
Turnover Rate Formula
30. (Cash + Accounts Receivable) / Current Liabilities
5 Steps of Retail Inventory Method
The Cost Method
Cash Flow Formula
Acid Test or Quick Ratio (QR) Formula
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
Debt Equity Ratio
Debt Equity Ratio Formula
Profit
32. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Markup % of Retail Formula
Balance Sheet
Buying Errors
33. 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.
Return on Net Worth (RONW) Formula
Selling Price Formula
Cost of Goods Sold (COGS) Formula
Accounts Receivable (AR)
34. 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
GMROII (Gross Margin Return on Inventory Investment)
Early Markdowns
Current Ratio (CR) Formula
Current Ratio
35. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Profit
Markdown Cancellations
36. Revenues received by a retailer
Ideal Markdown
Net Sales
Pricing Errors
Sell-Through Rate
37. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Net Sales
Clearance Markdowns
Cost Complement Formula
Pricing Depends on 2 factors
38. The prices from lowest to highest that are carried within a merchandise category
Return on Assets
Uncontrollable Errors
Current Assets
Pricing Strategies: Price Ranges
39. 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
Sell-Through Rate
Retail Price Formula
Cost Complement Formula
Price Sensitivity
40. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Current Ratio (CR) Formula
Pricing Strategies: Price Ranges
Retail Inventory Method
Promotion Errors
41. Cost + Markup
Depreciation
Return on Net Worth (RONW) Formula
Selling Price Formula
Net Profit
42. Financial debts incurred by a retailer
Clearance Markdowns
Liabilities
Gross Margin
Profit
43. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Pricing Strategies: Price Lining
Buying Errors
Initial Markup (IMU)
Return on Net Worth
44. Having the right merchandise - at the right time - for the right price - in the right place
Late Markdowns
Original Price
Adage of Profitability for Retailers
Current Assets
45. 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
Profit
Current Ratio
Pricing Strategies: Price Lining
5 Steps of Retail Inventory Method
46. Net Profit After Taxes/ Total Assets
Markdown optimization
5 Steps of Retail Inventory Method
Retail Price Formula
Return on Assets (ROA) Formul
47. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Expense Ratio Formula
Turnover Rate Formula
Cumulative Markup
Fixed Liabilities
48. (planned expenses + planned operating profit + planned stock shortages + markdowns + employee and customer discounts) / (planned net sales + stock shortages + markdowns + employee and customer discounts) x 100%
Planned Initial Markup % Formula
Markdown Cancellations
The Cost Method
Operating Expenses
49. Can be transformed simply and rapidly into cash
Current Assets
Profit
Adage of Profitability for Retailers
Markup % of Cost Formula
50. 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
Liabilities
Net Profit
Dollar Markdown Formula
Current Ratio