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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
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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. 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
Profit and Loss Statement (P&L Statement)
Early Markdowns
Profit Margin
Loss-Leader
2. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold (COGS) Formula
Pricing Depends on 2 factors
Cost of Goods Sold
Expense Ratio Formula
3. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Ideal Markdown
Pricing Depends on 2 factors
New Price
Buying Errors
4. 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)
Liabilities
Current Assets
Pricing Strategies: Price Lining
5. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Markdown Cancellations
Off-Price Markdown Percentage Formula
Pricing Strategies
6. The retailers financial condition at a specific point in time
Operating Expenses
Loss-Leader
Balance Sheet
Return on Net Worth
7. 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
Current Ratio
Planned Initial Markup % Formula
Selling Price Formula
8. Cost + Markup
Reasons for taking Markdowns
Selling Price Formula
Return on Sales
Markup % of Cost Formula
9. (gross margin % x Turnover) / (100%-markup %)
Pricing Depends on 2 factors
Markdown Percentage
Current Ratio (CR) Formula
Gross Margin Return on Inventory Investment-GMROI Formula
10. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Current Liabilities
Selling Price Formula
Original Price
Buying Errors
11. Price is changed (up or down)
Uncontrollable Errors
Regular Price
Profit and Loss Statement (P&L Statement)
New Price
12. Sales less cost of goods sold
Markup
Gross Margin
Financial Leverage Ratio
Off-Price Markdown Percentage Formula
13. Sales for the period/ average inventory
Turnover Rate Formula
Cost of Goods Sold (COGS) Formula
Return on Assets (ROA) Formul
Initial Markup (IMU)
14. Having the right merchandise - at the right time - for the right price - in the right place
Acid Test or Quick Ratio (QR) Formula
Markdown
Adage of Profitability for Retailers
Off-Price Markdowns
15. Evaluates the managament of capital
Return on Sales
Profit and Loss Statement (P&L Statement)
Return on Net Worth (RONW) Formula
The Cost Method
16. 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.
Pricing Strategies: Price Zones
Regular Price
Inventory
Late Markdowns
17. 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
LIFO (last in - first out)
Uncontrollable Errors
Assets Formula
Reasons for taking Markdowns
18. Dollar markup ($)/ retail price ($)
Selling Price Formula
Profit Margin Analysis Formula
Markup % of Retail Formula
Uncontrollable Errors
19. Short time - like 1 or 2 day sales
Net Sales
Return on Assets
Fixed Assets
Temporary Price Reduction
20. 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.
Assets Formula
Cost of Goods Sold (COGS) Formula
Expense Ratio
FIFO (First in - First out)
21. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Financial Leverage Ratio
Forced Obsolescence
Temporary Price Reduction
22. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Net Profit
Markdown Optimization
Selling Price Formula
Return on Assets
23. 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.
LIFO (last in - first out)
Accounts Receivable (AR)
Pricing Strategies: Price Zones
Price Sensitivity
24. Net dollar markdown/ net dollar selling price
The Cost Method
Pricing Strategies: Price Lining
Markdown Percentage Formula
Financial Leverage Ratio Formula
25. Financial debts incurred by a retailer
Liabilities
Operating Expenses
Profit and Loss Statement (P&L Statement)
Markdown Percentage
26. Cost Price/ (100%-markup %)
Retail Price Formula
Financial Leverage Ratio Formula
Operating Expenses
Current Ratio (CR) Formula
27. (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%
Late Markdowns
Pricing Strategies
Markdown Percentage Formula
Planned Initial Markup % Formula
28. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Net Profit
Retail Inventory Method
Off-Price Markdown Percentage Formula
Expense Ratio Formula
29. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Expense Ratio Formula
Pricing Depends on 2 factors
Buying Errors
30. Net Profit/ Net Sales
Profit Margin Analysis Formula
Assets
Inventory
Return on Assets (ROA) Formul
31. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Cumulative Markup
Debt Equity Ratio
Initial Markup (IMU)
Planned Initial Markup % Formula
32. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Debt Equity Ratio Formula
Return on Net Worth (RONW) Formula
Ideal Markdown
33. Improper displays - merchandise returns due to high pressure selling
Current Ratio (CR) Formula
Promotion Errors
Adage of Profitability for Retailers
Fixed Assets
34. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Selling Price Formula
Markdown
Markdown Percentage
Markup
35. 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
Planned Initial Markup % Formula
Financial Leverage Ratio
Gross Margin
Clearance Markdowns
36. 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.
Pricing Strategies: Price Lining
Pricing Depends on 2 factors
Inventory
Reasons for taking Markdowns
37. Promotional markdown that involves selling at or near cost for promotional purposes
Cumulative Markup
Expense Ratio Formula
Loss-Leader
Operating Expenses
38. 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
Markdown
Assets
5 Steps of Retail Inventory Method
Cash Flow Formula
39. 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
Turnover Rate Formula
Early Markdowns
Sell-Through Rate
Depreciation
40. 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
Off-Price Markdowns
Promotion Errors
Pricing Strategies: Price Lining
41. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Original Price
Forced Obsolescence
Off-Price Markdowns
Assets Formula
42. 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 Margin Analysis Formula
Uncontrollable Errors
The Cost Method
Cost of Goods Sold
43. 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
Debt Equity Ratio
Forced Obsolescence
Pricing Strategies
Expense Ratio
44. Net Profit After Taxes/ Total Assets
Markup
Return on Assets (ROA) Formul
Return on Assets
Markdown Percentage
45. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Markdown Optimization
Retail Inventory Method
Return on Net Worth
46. 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
Regular Price
Fixed Assets
Temporary Price Reduction
47. Price Lining - price zones - price ranges
Net Profit
Return on Net Worth (RONW) Formula
Pricing Strategies
Fixed Liabilities
48. Priced too high initially - priced too low - selling price of competitors
Markdown Cancellation ($) Formula
Pricing Errors
Markup % of Retail Formula
Markdown optimization
49. The energizing force that fuels and sustains our economic system
Return on Assets (ROA) Formul
Debt Equity Ratio
Profit
New Price
50. Cash Received by the retailer-cash leaving the retailer
Off-Price Markdowns
Assets Formula
Cash Flow Formula
Pricing Depends on 2 factors