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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. Sales for the period/ average inventory
Turnover Rate Formula
Operating Expenses
Reasons for taking Markdowns
Fixed Assets
2. 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.
Reasons for taking Markdowns
Current Ratio (CR) Formula
Fixed Liabilities
Inventory
3. 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
Markdown
Regular Price
4. Net dollar markdown/ net dollar selling price
Markup % of Cost Formula
Expense Ratio Formula
Balance Sheet
Markdown Percentage Formula
5. Cost + Markup
Fixed Assets
Return on Assets (ROA) Formul
Late Markdowns
Selling Price Formula
6. The retailers financial condition at a specific point in time
Ideal Markdown
Pricing Strategies
Return on Sales
Balance Sheet
7. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Loss-Leader
Initial Markup (IMU)
Dollar Markdown Formula
Return on Assets
8. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Return on Assets (ROA) Formul
Pricing Strategies: Price Zones
Regular Price
9. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Profit
Pricing Strategies: Price Lining
Retail Price Formula
Current Ratio (CR) Formula
10. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Loss-Leader
Return on Sales
Markdown
Markdown Cancellations
11. Liabilities+ Owner's equity or net worth
Balance Sheet
The Cost Method
Assets Formula
Return on Net Worth (RONW) Formula
12. Usually lower than original - but held for longer period
Expense Ratio Formula
Regular Price
New Price
Current Assets
13. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Assets
5 Steps of Retail Inventory Method
Acid test or Quick Ratio
Profit and Loss Statement (P&L Statement)
14. 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
Original Price
Return on Assets (ROA) Formul
Profit Margin
15. Current Liabilites/ Net Worth
Markup
Debt Equity Ratio Formula
Cost of Goods Sold
Reasons for taking Markdowns
16. 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
Cash Flow Formula
Net Profit
Fixed Assets
Current Ratio
17. Current Assets/ Current Liabilities
Pricing Strategies: Price Lining
Net Sales
Current Ratio (CR) Formula
Debt Equity Ratio Formula
18. 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
Cost of Goods Sold (COGS) Formula
Fixed Liabilities
Original Price
FIFO (First in - First out)
19. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
LIFO (last in - first out)
Fixed Liabilities
Acid test or Quick Ratio
Pricing Strategies
20. Original Retail price- markdown selling price
Markdown optimization
Current Ratio (CR) Formula
Markdown Percentage
Dollar Markdown Formula
21. Evaluates the managament of capital
Cost Complement Formula
Retail Inventory Method
Return on Sales
Net Profit
22. Total Expenses/ Net Sales
Inventory
Return on Net Worth
Expense Ratio Formula
Profit
23. 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
Pricing Strategies: Price Zones
The Cost Method
Current Liabilities
Early Markdowns
24. Price Lining - price zones - price ranges
Return on Assets
Pricing Strategies
The Cost Method
Expense Ratio
25. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Expense Ratio Formula
Cost of Goods Sold (COGS) Formula
Buying Errors
Pricing Strategies: Price Zones
26. 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.
Return on Net Worth (RONW) Formula
Acid test or Quick Ratio
Cost Complement Formula
Expense Ratio Formula
27. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown
Return on Assets (ROA) Formul
Cost of Goods Sold
Pricing Strategies: Price Lining
28. 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
Uncontrollable Errors
Buying Errors
The Cost Method
29. Sales less cost of goods sold
Gross Margin
Cost of Goods Sold (COGS) Formula
Ideal Markdown
Temporary Price Reduction
30. Improper displays - merchandise returns due to high pressure selling
Markup % of Retail Formula
Markdown Percentage Formula
Cumulative Markup
Promotion Errors
31. Total Markup on all goods on hand/ retail price of all goods on hand
Pricing Strategies: Price Lining
Return on Net Worth (RONW) Formula
Cumulative Markup % Formula
Original Price
32. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Cost of Goods Sold
Planned Initial Markup % Formula
Current Ratio (CR) Formula
33. Financial debts incurred by a retailer
Current Ratio (CR) Formula
Expense Ratio
Liabilities
Return on Assets
34. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Uncontrollable Errors
Off-Price Markdowns
GMROII (Gross Margin Return on Inventory Investment)
Pricing Strategies: Price Lining
35. Revenues received by a retailer
Pricing Strategies
Original Price
Net Sales
Return on Assets (ROA) Formul
36. Net Profit After Taxes/ Total Assets
Return on Assets (ROA) Formul
Acid test or Quick Ratio
Selling Price Formula
Markdown Cancellation ($) Formula
37. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Profit and Loss Statement (P&L Statement)
GMROII (Gross Margin Return on Inventory Investment)
Fixed Liabilities
38. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Pricing Strategies
Buying Errors
Gross Margin Return on Inventory Investment-GMROI Formula
Assets Formula
39. Can be transformed simply and rapidly into cash
Gross Margin Return on Inventory Investment-GMROI Formula
Acid Test or Quick Ratio (QR) Formula
Current Assets
Cost of Goods Sold (COGS) Formula
40. 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.
Accounts Receivable (AR)
LIFO (last in - first out)
Turnover Rate Formula
Markdown optimization
41. 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
Sell-Through Rate
Acid test or Quick Ratio
Depreciation
LIFO (last in - first out)
42. 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
Markup
Price Sensitivity
Acid Test or Quick Ratio (QR) Formula
Pricing Strategies: Price Ranges
43. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Profit Margin Analysis Formula
Markup % of Cost Formula
Markdown Optimization
Early Markdowns
44. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Initial Markup (IMU)
Markdown optimization
Markdown
45. 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.
Dollar Markdown Formula
Late Markdowns
Markup
Profit
46. 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
Current Ratio
Clearance Markdowns
Off-Price Markdowns
Loss-Leader
47. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Temporary Price Reduction
Fixed Assets
Acid Test or Quick Ratio (QR) Formula
Price Sensitivity
48. Price is changed (up or down)
Off-Price Markdown Percentage Formula
Acid Test or Quick Ratio (QR) Formula
New Price
Gross Margin Return on Inventory Investment-GMROI Formula
49. 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 Lining
Gross Margin Return on Inventory Investment-GMROI Formula
Markdown optimization
Late Markdowns
50. The weather - merchandise is shopworn - economic downturn
Initial Markup (IMU)
Regular Price
Selling Price Formula
Uncontrollable Errors