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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. 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
Financial Leverage Ratio
Reasons for taking Markdowns
Profit Margin
GMROII (Gross Margin Return on Inventory Investment)
2. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Profit and Loss Statement (P&L Statement)
Depreciation
Current Ratio
Pricing Strategies
3. Original Retail price- markdown selling price
Promotion Errors
Pricing Strategies: Price Zones
Pricing Strategies: Price Lining
Dollar Markdown Formula
4. Liabilities+ Owner's equity or net worth
Profit
Assets Formula
Promotion Errors
Acid test or Quick Ratio
5. Net Profit After Taxes/ Net Worth
Acid test or Quick Ratio
Return on Net Worth (RONW) Formula
Clearance Markdowns
Retail Inventory Method
6. Sales for the period/ average inventory
Retail Price Formula
Acid Test or Quick Ratio (QR) Formula
Cash Flow Formula
Turnover Rate Formula
7. Total Expenses/ Net Sales
Return on Assets
Expense Ratio Formula
Regular Price
Assets
8. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Gross Margin Return on Inventory Investment-GMROI Formula
Retail Inventory Method
Early Markdowns
Acid test or Quick Ratio
9. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Promotion Errors
Current Ratio (CR) Formula
Operating Expenses
Forced Obsolescence
10. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Temporary Price Reduction
Operating Expenses
Regular Price
11. One that is just enough to move the goods
Ideal Markdown
LIFO (last in - first out)
Cost Complement Formula
Acid Test or Quick Ratio (QR) Formula
12. Usually lower than original - but held for longer period
Turnover Rate Formula
Pricing Depends on 2 factors
Regular Price
Debt Equity Ratio
13. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
The Cost Method
Off-Price Markdown Percentage Formula
Depreciation
Expense Ratio Formula
14. Total Markup on all goods on hand/ retail price of all goods on hand
Profit and Loss Statement (P&L Statement)
Pricing Errors
Return on Assets
Cumulative Markup % Formula
15. Cost + Markup
Selling Price Formula
Financial Leverage Ratio
Retail Price Formula
Debt Equity Ratio
16. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cumulative Markup % Formula
Cost of Goods Sold (COGS) Formula
Liabilities
Markup % of Retail Formula
17. 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
Selling Price Formula
Clearance Markdowns
Fixed Assets
Current Ratio (CR) Formula
18. Net Profit After Taxes/ Total Assets
Selling Price Formula
Return on Assets (ROA) Formul
Markup % of Retail Formula
Gross Margin Return on Inventory Investment-GMROI Formula
19. 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.
Temporary Price Reduction
Promotional Markdown
Late Markdowns
Liabilities
20. Can be transformed simply and rapidly into cash
Current Liabilities
Sell-Through Rate
Current Assets
Pricing Errors
21. Priced too high initially - priced too low - selling price of competitors
Dollar Markdown Formula
Cash Flow Formula
Retail Price Formula
Pricing Errors
22. Improper displays - merchandise returns due to high pressure selling
GMROII (Gross Margin Return on Inventory Investment)
Return on Assets
Inventory
Promotion Errors
23. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Balance Sheet
Fixed Liabilities
Markdown optimization
Expense Ratio
24. Price is changed (up or down)
New Price
Adage of Profitability for Retailers
Return on Sales
Markup % of Retail Formula
25. Promotional markdown that involves selling at or near cost for promotional purposes
Loss-Leader
Clearance Markdowns
Current Ratio
Turnover Rate Formula
26. The cost of merchandise that was sold (including the method that was used to determine cost)
Balance Sheet
Cost of Goods Sold
Original Price
Pricing Strategies: Price Lining
27. Net Profit/ Net Sales
Debt Equity Ratio
Profit Margin Analysis Formula
Current Assets
Net Profit
28. 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
Loss-Leader
FIFO (First in - First out)
Cost Complement Formula
Current Ratio (CR) Formula
29. Short time - like 1 or 2 day sales
Temporary Price Reduction
Markdown optimization
Pricing Strategies
Pricing Strategies: Price Lining
30. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Promotional Markdown
Cumulative Markup
Markdown optimization
Loss-Leader
31. Ranges of prices that appeals for a particular group of consumers
Net Profit
Pricing Strategies: Price Zones
Accounts Receivable (AR)
Ideal Markdown
32. 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
Pricing Errors
Return on Assets
Price Sensitivity
Balance Sheet
33. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Depreciation
Sell-Through Rate
LIFO (last in - first out)
34. 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 Margin
New Price
Pricing Depends on 2 factors
Profit Margin Analysis Formula
35. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Acid test or Quick Ratio
Dollar Markdown Formula
Current Ratio (CR) Formula
36. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Cost Complement Formula
Return on Assets (ROA) Formul
Current Liabilities
Debt Equity Ratio
37. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Cost Complement Formula
Return on Assets
Cumulative Markup
Inventory
38. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Markup % of Cost Formula
Price Sensitivity
Retail Inventory Method
39. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Return on Assets
Financial Leverage Ratio
Net Profit
LIFO (last in - first out)
40. Financial debts incurred by a retailer
Uncontrollable Errors
Late Markdowns
Liabilities
Clearance Markdowns
41. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Cumulative Markup % Formula
Fixed Liabilities
Early Markdowns
42. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Pricing Strategies: Price Ranges
Pricing Strategies: Price Zones
Fixed Assets
Forced Obsolescence
43. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Inventory
Markdown Percentage
Forced Obsolescence
Dollar Markdown Formula
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.
Markup
Expense Ratio
Temporary Price Reduction
Original Price
45. Total Assets/ Net Worth
Markup
Cash Flow Formula
Financial Leverage Ratio Formula
Profit
46. 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
Markdown Cancellations
Sell-Through Rate
Operating Expenses
Debt Equity Ratio
47. Having the right merchandise - at the right time - for the right price - in the right place
Financial Leverage Ratio
Pricing Errors
Adage of Profitability for Retailers
Early Markdowns
48. The weather - merchandise is shopworn - economic downturn
Balance Sheet
Cost of Goods Sold (COGS) Formula
Original Price
Uncontrollable Errors
49. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Return on Net Worth
Price Sensitivity
Acid Test or Quick Ratio (QR) Formula
Markdown Optimization
50. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Gross Margin
Profit
Initial Markup (IMU)
Price Sensitivity