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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. Having the right merchandise - at the right time - for the right price - in the right place
Financial Leverage Ratio Formula
Off-Price Markdowns
Financial Leverage Ratio
Adage of Profitability for Retailers
2. Buying errors - promotion errors - pricing errors - uncontrollable errors
LIFO (last in - first out)
Reasons for taking Markdowns
Markup % of Retail Formula
Temporary Price Reduction
3. Improper displays - merchandise returns due to high pressure selling
Net Profit
Return on Net Worth
Promotion Errors
New Price
4. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Cost Complement Formula
Markdown
Acid Test or Quick Ratio (QR) Formula
Buying Errors
5. 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
New Price
LIFO (last in - first out)
Depreciation
Debt Equity Ratio Formula
6. Short time - like 1 or 2 day sales
Markdown optimization
Off-Price Markdowns
Markdown Optimization
Temporary Price Reduction
7. 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
Temporary Price Reduction
Sell-Through Rate
Net Sales
8. Net dollar markdown/ net dollar selling price
Initial Markup (IMU)
Markdown Percentage Formula
LIFO (last in - first out)
Pricing Strategies: Price Zones
9. Dollar markup ($)/ cost price ($)
Regular Price
Accounts Receivable (AR)
Markup % of Cost Formula
Early Markdowns
10. Cost Price/ (100%-markup %)
Retail Price Formula
Cumulative Markup % Formula
Operating Expenses
Sell-Through Rate
11. 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.
Accounts Receivable (AR)
Return on Net Worth (RONW) Formula
Planned Initial Markup % Formula
Late Markdowns
12. 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
Financial Leverage Ratio Formula
Net Profit
Markdown Cancellation ($) Formula
Clearance Markdowns
13. Basic premise is to increase profits through more sales without an increase in inventory. Inventory is expressed in cost terms rather than cost percent - because it is related to investment dollars in gross margin - it should be expressed in cost num
Promotional Markdown
GMROII (Gross Margin Return on Inventory Investment)
Pricing Strategies: Price Zones
Profit Margin
14. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Clearance Markdowns
5 Steps of Retail Inventory Method
Cost Complement Formula
15. 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)
Net Profit
Regular Price
16. Net Profit After Taxes/ Net Worth
Net Profit
Return on Net Worth (RONW) Formula
Temporary Price Reduction
Pricing Depends on 2 factors
17. Price Lining - price zones - price ranges
Debt Equity Ratio Formula
Pricing Strategies
Acid Test or Quick Ratio (QR) Formula
Pricing Depends on 2 factors
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
Cumulative Markup % Formula
Adage of Profitability for Retailers
FIFO (First in - First out)
Profit
19. Cost + Markup
Selling Price Formula
Markdown optimization
Buying Errors
Pricing Strategies: Price Zones
20. Financial debts incurred by a retailer
New Price
Off-Price Markdowns
Planned Initial Markup % Formula
Liabilities
21. 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
Uncontrollable Errors
Reasons for taking Markdowns
Price Sensitivity
Markdown Percentage
22. (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 Optimization
Promotion Errors
Buying Errors
23. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Current Assets
Pricing Strategies: Price Lining
Return on Net Worth (RONW) Formula
Markdown
24. Temporary price reduction for a specific period of time for the express purpose of generating store traffic and sales. Prices return to original retail price at end of sale period.
Planned Initial Markup % Formula
Clearance Markdowns
Promotional Markdown
Fixed Liabilities
25. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Late Markdowns
Pricing Strategies: Price Zones
Cost Complement Formula
Retail Inventory Method
26. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Buying Errors
Price Sensitivity
Off-Price Markdowns
Initial Markup (IMU)
27. 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
Financial Leverage Ratio Formula
Return on Net Worth
Liabilities
The Cost Method
28. 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
Return on Sales
Buying Errors
Pricing Errors
Early Markdowns
29. 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
Clearance Markdowns
Assets Formula
Reasons for taking Markdowns
30. Sales for the period/ average inventory
Return on Net Worth (RONW) Formula
Return on Assets
Turnover Rate Formula
Markdown Percentage
31. Original Retail price- markdown selling price
Regular Price
Current Ratio (CR) Formula
Dollar Markdown Formula
Depreciation
32. Net Profit After Taxes/ Total Assets
Gross Margin Return on Inventory Investment-GMROI Formula
Markdown
Acid test or Quick Ratio
Return on Assets (ROA) Formul
33. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Profit Margin
Late Markdowns
Forced Obsolescence
34. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Markup % of Cost Formula
Return on Net Worth
Current Assets
Expense Ratio
35. 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
Acid test or Quick Ratio
Early Markdowns
Cost of Goods Sold (COGS) Formula
Current Ratio
36. 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
Markup
Debt Equity Ratio Formula
Late Markdowns
37. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Original Price
The Cost Method
Profit Margin Analysis Formula
38. Promotional markdown that involves selling at or near cost for promotional purposes
Pricing Errors
Assets Formula
Loss-Leader
Current Ratio (CR) Formula
39. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Current Ratio (CR) Formula
Buying Errors
Financial Leverage Ratio Formula
Dollar Markdown Formula
40. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Return on Net Worth
Depreciation
Current Assets
Pricing Errors
41. What the retailer owns in monetary value
Regular Price
Assets
Initial Markup (IMU)
Price Sensitivity
42. Sales less cost of goods sold
Buying Errors
Gross Margin
Promotion Errors
Price Sensitivity
43. Liabilities+ Owner's equity or net worth
Assets Formula
Markdown Optimization
Profit Margin Analysis Formula
Clearance Markdowns
44. 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.
Gross Margin Return on Inventory Investment-GMROI Formula
Markup
Current Liabilities
Sell-Through Rate
45. The retailers financial condition at a specific point in time
Balance Sheet
Return on Net Worth
Promotion Errors
Acid test or Quick Ratio
46. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Temporary Price Reduction
Acid test or Quick Ratio
Pricing Strategies
47. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Profit and Loss Statement (P&L Statement)
Uncontrollable Errors
Markup % of Retail Formula
Markdown Optimization
48. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Fixed Liabilities
Pricing Strategies: Price Ranges
Clearance Markdowns
49. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
New Price
Pricing Depends on 2 factors
Markdown Cancellation ($) Formula
Return on Net Worth
50. Costs involved in running the business
Acid Test or Quick Ratio (QR) Formula
Markdown Cancellations
Forced Obsolescence
Operating Expenses