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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. (gross margin % x Turnover) / (100%-markup %)
Acid Test or Quick Ratio (QR) Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Cost of Goods Sold (COGS) Formula
Markdown Optimization
2. Net Profit After Taxes/ Net Worth
Profit Margin
Dollar Markdown Formula
Operating Expenses
Return on Net Worth (RONW) Formula
3. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
FIFO (First in - First out)
Cost Complement Formula
Buying Errors
4. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Current Assets
Price Sensitivity
Net Profit
Retail Inventory Method
5. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Price Sensitivity
Forced Obsolescence
Markdown Cancellations
Retail Inventory Method
6. Sales for the period/ average inventory
Turnover Rate Formula
Profit and Loss Statement (P&L Statement)
Net Sales
Net Profit
7. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Fixed Liabilities
Balance Sheet
Ideal Markdown
8. Cash Received by the retailer-cash leaving the retailer
Markdown
Pricing Strategies: Price Zones
Cash Flow Formula
Current Liabilities
9. The energizing force that fuels and sustains our economic system
Off-Price Markdowns
Profit
Cumulative Markup
Markup % of Retail Formula
10. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Markdown
Return on Net Worth (RONW) Formula
Balance Sheet
11. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Promotional Markdown
Fixed Assets
Buying Errors
Operating Expenses
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
Adage of Profitability for Retailers
Cumulative Markup
Cash Flow Formula
Clearance Markdowns
13. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Markdown Cancellations
Profit
GMROII (Gross Margin Return on Inventory Investment)
14. Total Assets/ Net Worth
Fixed Assets
Markdown Percentage Formula
Return on Assets
Financial Leverage Ratio Formula
15. Costs involved in running the business
Operating Expenses
Pricing Strategies: Price Lining
Loss-Leader
Gross Margin
16. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Cost of Goods Sold
Dollar Markdown Formula
Buying Errors
Acid test or Quick Ratio
17. Sales less cost of goods sold
Debt Equity Ratio Formula
Net Profit
Gross Margin
Markdown
18. 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.
Late Markdowns
Initial Markup (IMU)
Selling Price Formula
Expense Ratio
19. One that is just enough to move the goods
Loss-Leader
Off-Price Markdowns
5 Steps of Retail Inventory Method
Ideal Markdown
20. 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
Debt Equity Ratio Formula
Markdown
Early Markdowns
Ideal Markdown
21. 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.
Inventory
Forced Obsolescence
Early Markdowns
Operating Expenses
22. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Markup % of Cost Formula
Promotional Markdown
Cost of Goods Sold
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
Cost of Goods Sold (COGS) Formula
The Cost Method
Cost Complement Formula
Current Liabilities
24. Net Profit/ Net Sales
Markdown Percentage Formula
Price Sensitivity
Cost Complement Formula
Profit Margin Analysis Formula
25. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Balance Sheet
Cost of Goods Sold (COGS) Formula
GMROII (Gross Margin Return on Inventory Investment)
Assets
26. 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
Planned Initial Markup % Formula
Current Ratio
Markdown Optimization
Cash Flow Formula
27. Liabilities+ Owner's equity or net worth
Assets Formula
Debt Equity Ratio
Financial Leverage Ratio
Turnover Rate Formula
28. Original Retail price- markdown selling price
Sell-Through Rate
Current Liabilities
Off-Price Markdown Percentage Formula
Dollar Markdown Formula
29. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Optimization
Pricing Errors
Markdown Percentage
Promotion Errors
30. 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
Debt Equity Ratio
Price Sensitivity
Forced Obsolescence
Retail Price Formula
31. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Strategies: Price Zones
Pricing Depends on 2 factors
Promotion Errors
Clearance Markdowns
32. 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)
Markdown optimization
Debt Equity Ratio
Markdown Cancellations
33. Price is changed (up or down)
Promotion Errors
New Price
Cash Flow Formula
Assets Formula
34. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Accounts Receivable (AR)
Cost Complement Formula
Markup
Cash Flow Formula
35. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Liabilities
Acid test or Quick Ratio
Markdown
Net Profit
36. Cost Price/ (100%-markup %)
Dollar Markdown Formula
Acid test or Quick Ratio
Markup % of Cost Formula
Retail Price Formula
37. Usually lower than original - but held for longer period
Regular Price
LIFO (last in - first out)
Markdown
Promotion Errors
38. What the retailer owns in monetary value
Assets
Uncontrollable Errors
Financial Leverage Ratio
Sell-Through Rate
39. The retailers financial condition at a specific point in time
Loss-Leader
Balance Sheet
Depreciation
Promotional Markdown
40. Promotional markdown that involves selling at or near cost for promotional purposes
Planned Initial Markup % Formula
Loss-Leader
Debt Equity Ratio
Profit and Loss Statement (P&L Statement)
41. The number of items remaining in stock x dollar markdown
Assets
Clearance Markdowns
Markdown Cancellation ($) Formula
Profit
42. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Uncontrollable Errors
Operating Expenses
Assets
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
Buying Errors
Markdown optimization
Acid Test or Quick Ratio (QR) Formula
Gross Margin Return on Inventory Investment-GMROI Formula
44. The prices from lowest to highest that are carried within a merchandise category
Pricing Depends on 2 factors
Financial Leverage Ratio Formula
Pricing Strategies
Pricing Strategies: Price Ranges
45. 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
FIFO (First in - First out)
Profit and Loss Statement (P&L Statement)
Clearance Markdowns
Acid Test or Quick Ratio (QR) Formula
46. Total Markup on all goods on hand/ retail price of all goods on hand
Cost Complement Formula
Markdown Percentage Formula
Retail Price Formula
Cumulative Markup % Formula
47. First price or Manufacturers suggestet Retal Price (MSRP)
LIFO (last in - first out)
Pricing Errors
Original Price
Forced Obsolescence
48. Short time - like 1 or 2 day sales
Temporary Price Reduction
Cost Complement Formula
Assets
Pricing Strategies
49. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Sell-Through Rate
Early Markdowns
Selling Price Formula
Current Liabilities
50. Current Liabilites/ Net Worth
Profit Margin Analysis Formula
Pricing Strategies
Debt Equity Ratio Formula
Balance Sheet