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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. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Off-Price Markdown Percentage Formula
Financial Leverage Ratio
Sell-Through Rate
Retail Inventory Method
2. Dollar markup ($)/ cost price ($)
Markdown optimization
Depreciation
Return on Net Worth
Markup % of Cost Formula
3. Cash Received by the retailer-cash leaving the retailer
Markdown Optimization
Cash Flow Formula
Expense Ratio Formula
Reasons for taking Markdowns
4. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Current Liabilities
Pricing Strategies: Price Lining
Initial Markup (IMU)
5. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Pricing Strategies
FIFO (First in - First out)
Temporary Price Reduction
6. Original Retail price- markdown selling price
Dollar Markdown Formula
Markdown Optimization
New Price
Original Price
7. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Promotion Errors
Debt Equity Ratio
Financial Leverage Ratio Formula
Markdown Cancellations
8. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Pricing Strategies: Price Zones
Cumulative Markup
Retail Price Formula
Promotion Errors
9. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Planned Initial Markup % Formula
Fixed Liabilities
Accounts Receivable (AR)
Current Liabilities
10. 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
Price Sensitivity
Net Profit
Net Sales
Gross Margin
11. Improper displays - merchandise returns due to high pressure selling
Original Price
Promotional Markdown
Debt Equity Ratio
Promotion Errors
12. (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
Pricing Strategies: Price Lining
Loss-Leader
13. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Depreciation
Off-Price Markdown Percentage Formula
Gross Margin
Pricing Strategies: Price Lining
14. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Pricing Strategies: Price Ranges
Markdown optimization
Pricing Strategies
Markdown Cancellation ($) Formula
15. The retailers financial condition at a specific point in time
Balance Sheet
Return on Assets (ROA) Formul
Forced Obsolescence
Liabilities
16. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Cost Complement Formula
Gross Margin
Expense Ratio Formula
Return on Net Worth
17. The energizing force that fuels and sustains our economic system
Markdown Cancellations
Profit
The Cost Method
Adage of Profitability for Retailers
18. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Pricing Errors
Debt Equity Ratio
Net Profit
FIFO (First in - First out)
19. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Expense Ratio
Planned Initial Markup % Formula
Pricing Strategies: Price Ranges
Cost Complement Formula
20. Price is changed (up or down)
Accounts Receivable (AR)
New Price
Markdown Cancellations
Cumulative Markup % Formula
21. Dollar markup ($)/ retail price ($)
GMROII (Gross Margin Return on Inventory Investment)
Return on Assets (ROA) Formul
Return on Net Worth
Markup % of Retail Formula
22. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Promotion Errors
Forced Obsolescence
5 Steps of Retail Inventory Method
23. Net Profit After Taxes/ Net Worth
Profit Margin Analysis Formula
Markdown Optimization
Return on Net Worth (RONW) Formula
Markdown Percentage
24. Usually lower than original - but held for longer period
Cost of Goods Sold (COGS) Formula
FIFO (First in - First out)
Depreciation
Regular Price
25. Price Lining - price zones - price ranges
Debt Equity Ratio Formula
Debt Equity Ratio
Expense Ratio
Pricing Strategies
26. 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
Assets
Temporary Price Reduction
Expense Ratio
27. 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
Fixed Liabilities
Debt Equity Ratio
Expense Ratio Formula
Selling Price Formula
28. 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
Cost of Goods Sold
Off-Price Markdowns
Sell-Through Rate
Loss-Leader
29. Total Markup on all goods on hand/ retail price of all goods on hand
Late Markdowns
Cumulative Markup % Formula
Retail Price Formula
Original Price
30. Promotional markdown that involves selling at or near cost for promotional purposes
Cumulative Markup
Financial Leverage Ratio Formula
Loss-Leader
Profit and Loss Statement (P&L Statement)
31. Having the right merchandise - at the right time - for the right price - in the right place
Reasons for taking Markdowns
Adage of Profitability for Retailers
Assets
Pricing Errors
32. The cost of merchandise that was sold (including the method that was used to determine cost)
Inventory
Cost of Goods Sold
Debt Equity Ratio
Profit Margin Analysis Formula
33. 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
Depreciation
Clearance Markdowns
Markdown Cancellations
Pricing Depends on 2 factors
34. Net Profit After Taxes/ Total Assets
Return on Assets (ROA) Formul
Off-Price Markdown Percentage Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Current Ratio
35. Can be transformed simply and rapidly into cash
Fixed Assets
Cost of Goods Sold (COGS) Formula
Current Assets
Retail Price Formula
36. Financial debts incurred by a retailer
Markup % of Cost Formula
Temporary Price Reduction
Liabilities
Selling Price Formula
37. 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
Debt Equity Ratio
LIFO (last in - first out)
Sell-Through Rate
Buying Errors
38. Priced too high initially - priced too low - selling price of competitors
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Errors
Loss-Leader
Cumulative Markup % Formula
39. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
GMROII (Gross Margin Return on Inventory Investment)
Depreciation
Profit Margin Analysis Formula
Pricing Errors
40. Revenues received by a retailer
Liabilities
Net Sales
Current Assets
Cost of Goods Sold (COGS) Formula
41. Liabilities+ Owner's equity or net worth
The Cost Method
Pricing Strategies
Markdown Optimization
Assets Formula
42. Cost Price/ (100%-markup %)
Depreciation
Retail Price Formula
New Price
Return on Assets
43. Net dollar markdown/ net dollar selling price
Assets Formula
Cost Complement Formula
Profit Margin
Markdown Percentage Formula
44. 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
GMROII (Gross Margin Return on Inventory Investment)
Assets
Debt Equity Ratio
Assets Formula
45. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Return on Sales
Off-Price Markdown Percentage Formula
Cost of Goods Sold (COGS) Formula
Acid test or Quick Ratio
46. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Financial Leverage Ratio
The Cost Method
Fixed Liabilities
Profit Margin Analysis Formula
47. 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
Current Liabilities
Markdown Optimization
Promotion Errors
48. Buying errors - promotion errors - pricing errors - uncontrollable errors
Price Sensitivity
Retail Inventory Method
Gross Margin Return on Inventory Investment-GMROI Formula
Reasons for taking Markdowns
49. 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)
Markup % of Retail Formula
Markup % of Cost Formula
Selling Price Formula
50. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Pricing Errors
Profit and Loss Statement (P&L Statement)
Pricing Depends on 2 factors
Reasons for taking Markdowns