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Retail Financials
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. The energizing force that fuels and sustains our economic system
Profit
Retail Inventory Method
Original Price
Reasons for taking Markdowns
2. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Cost of Goods Sold (COGS) Formula
Pricing Strategies: Price Lining
Markup % of Retail Formula
Off-Price Markdowns
3. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Financial Leverage Ratio
Acid Test or Quick Ratio (QR) Formula
Assets
4. The number of items remaining in stock x dollar markdown
Pricing Strategies: Price Ranges
Accounts Receivable (AR)
Expense Ratio
Markdown Cancellation ($) Formula
5. 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.
Gross Margin
Inventory
Return on Net Worth (RONW) Formula
Profit Margin
6. Liabilities+ Owner's equity or net worth
Markup
Pricing Strategies: Price Ranges
Assets Formula
Pricing Strategies
7. Evaluates the managament of capital
Ideal Markdown
Pricing Strategies: Price Zones
Return on Sales
Return on Assets
8. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Net Sales
Early Markdowns
Cost Complement Formula
9. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Pricing Strategies: Price Lining
Cumulative Markup
New Price
Turnover Rate Formula
10. Cost + Markup
Cash Flow Formula
Selling Price Formula
Original Price
Acid Test or Quick Ratio (QR) Formula
11. Net Profit After Taxes/ Total Assets
Turnover Rate Formula
Return on Net Worth
Price Sensitivity
Return on Assets (ROA) Formul
12. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Pricing Strategies: Price Lining
Markdown Percentage
Late Markdowns
Markdown
13. Revenues received by a retailer
Markdown Cancellations
Debt Equity Ratio
Net Sales
Accounts Receivable (AR)
14. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Accounts Receivable (AR)
Adage of Profitability for Retailers
Markdown
Cost of Goods Sold (COGS) Formula
15. Net Profit/ Net Sales
Profit Margin Analysis Formula
Financial Leverage Ratio Formula
LIFO (last in - first out)
Cash Flow Formula
16. Buying errors - promotion errors - pricing errors - uncontrollable errors
Forced Obsolescence
Reasons for taking Markdowns
Turnover Rate Formula
Cost of Goods Sold (COGS) Formula
17. Financial debts incurred by a retailer
Cumulative Markup
LIFO (last in - first out)
Return on Assets (ROA) Formul
Liabilities
18. The prices from lowest to highest that are carried within a merchandise category
Return on Net Worth
Reasons for taking Markdowns
Pricing Strategies: Price Ranges
5 Steps of Retail Inventory Method
19. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Current Liabilities
Initial Markup (IMU)
Pricing Strategies: Price Ranges
20. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Selling Price Formula
Pricing Strategies: Price Ranges
Financial Leverage Ratio Formula
21. Usually lower than original - but held for longer period
Original Price
Early Markdowns
5 Steps of Retail Inventory Method
Regular Price
22. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
The Cost Method
Cost of Goods Sold
Adage of Profitability for Retailers
23. 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
Cost of Goods Sold (COGS) Formula
Pricing Strategies: Price Lining
Original Price
Profit Margin
24. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Expense Ratio
Balance Sheet
Retail Inventory Method
Early Markdowns
25. 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
Profit Margin Analysis Formula
Price Sensitivity
Ideal Markdown
26. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Net Profit
Forced Obsolescence
Acid test or Quick Ratio
Markdown Percentage Formula
27. What the retailer owns in monetary value
Adage of Profitability for Retailers
Assets
Ideal Markdown
Pricing Errors
28. 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)
Ideal Markdown
Promotion Errors
Retail Inventory Method
29. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Markdown Cancellations
Pricing Strategies: Price Zones
Markup % of Retail Formula
30. Sales less cost of goods sold
Gross Margin
Buying Errors
5 Steps of Retail Inventory Method
The Cost Method
31. Cost Price/ (100%-markup %)
Cost of Goods Sold (COGS) Formula
Cost Complement Formula
Turnover Rate Formula
Retail Price Formula
32. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Cost of Goods Sold
Cumulative Markup % Formula
Net Profit
Pricing Depends on 2 factors
33. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Retail Inventory Method
Accounts Receivable (AR)
Promotional Markdown
34. Promotional markdown that involves selling at or near cost for promotional purposes
Loss-Leader
Promotional Markdown
Net Profit
Fixed Assets
35. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Markup % of Retail Formula
Return on Assets
Pricing Strategies
Late Markdowns
36. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Buying Errors
Clearance Markdowns
Current Liabilities
Fixed Liabilities
37. Current Assets/ Current Liabilities
Pricing Strategies
Current Ratio (CR) Formula
Liabilities
Markdown Percentage Formula
38. 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
Return on Net Worth
FIFO (First in - First out)
GMROII (Gross Margin Return on Inventory Investment)
Cost of Goods Sold (COGS) Formula
39. 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
New Price
FIFO (First in - First out)
Markdown Cancellation ($) Formula
Planned Initial Markup % Formula
40. Short time - like 1 or 2 day sales
Temporary Price Reduction
Financial Leverage Ratio Formula
Pricing Depends on 2 factors
Early Markdowns
41. 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
LIFO (last in - first out)
Expense Ratio
Fixed Assets
42. The weather - merchandise is shopworn - economic downturn
Markdown Percentage Formula
Pricing Strategies: Price Ranges
Uncontrollable Errors
Adage of Profitability for Retailers
43. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Buying Errors
Price Sensitivity
The Cost Method
44. Priced too high initially - priced too low - selling price of competitors
Return on Net Worth
Fixed Liabilities
Profit Margin Analysis Formula
Pricing Errors
45. 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 Ranges
LIFO (last in - first out)
Return on Sales
Late Markdowns
46. Price is changed (up or down)
New Price
Promotional Markdown
Sell-Through Rate
Pricing Strategies
47. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
5 Steps of Retail Inventory Method
Markdown Percentage
Inventory
48. 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
Pricing Depends on 2 factors
Off-Price Markdown Percentage Formula
Fixed Assets
49. Price Lining - price zones - price ranges
Pricing Strategies
Markup % of Retail Formula
Depreciation
Initial Markup (IMU)
50. Total Markup on all goods on hand/ retail price of all goods on hand
Acid test or Quick Ratio
Cumulative Markup % Formula
Assets Formula
Regular Price
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