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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
Adage of Profitability for Retailers
Fixed Liabilities
Markdown Cancellations
Dollar Markdown Formula
2. The energizing force that fuels and sustains our economic system
Profit
Markup % of Cost Formula
Promotion Errors
Current Ratio (CR) Formula
3. Sales less cost of goods sold
Expense Ratio
Gross Margin
Return on Assets
Regular Price
4. Total Assets/ Net Worth
Sell-Through Rate
Cumulative Markup
Financial Leverage Ratio Formula
5 Steps of Retail Inventory Method
5. 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
Financial Leverage Ratio
Markup % of Retail Formula
Current Assets
5 Steps of Retail Inventory Method
6. 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
Liabilities
Markdown
LIFO (last in - first out)
Inventory
7. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Markdown
Return on Net Worth (RONW) Formula
Current Ratio (CR) Formula
Forced Obsolescence
8. Cost + Markup
Selling Price Formula
Expense Ratio
Adage of Profitability for Retailers
GMROII (Gross Margin Return on Inventory Investment)
9. 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
Return on Assets (ROA) Formul
Current Ratio (CR) Formula
Temporary Price Reduction
10. 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.
Expense Ratio
Assets Formula
Acid test or Quick Ratio
FIFO (First in - First out)
11. 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
GMROII (Gross Margin Return on Inventory Investment)
Current Ratio
Current Liabilities
Inventory
12. (gross margin % x Turnover) / (100%-markup %)
Net Profit
Uncontrollable Errors
Gross Margin Return on Inventory Investment-GMROI Formula
Temporary Price Reduction
13. Sales for the period/ average inventory
Cumulative Markup
Fixed Liabilities
Turnover Rate Formula
Return on Assets
14. 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
Price Sensitivity
Pricing Strategies: Price Lining
Markdown Cancellations
Debt Equity Ratio
15. The prices from lowest to highest that are carried within a merchandise category
Financial Leverage Ratio Formula
The Cost Method
Pricing Strategies: Price Ranges
Pricing Strategies
16. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Markup
Profit Margin Analysis Formula
Cost Complement Formula
17. Buying errors - promotion errors - pricing errors - uncontrollable errors
Retail Inventory Method
Reasons for taking Markdowns
Current Ratio (CR) Formula
Markdown Optimization
18. 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
Current Assets
Sell-Through Rate
Debt Equity Ratio
19. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Markdown Percentage
Cumulative Markup
Uncontrollable Errors
Initial Markup (IMU)
20. Evaluates the managament of capital
Reasons for taking Markdowns
Return on Sales
Clearance Markdowns
Profit
21. 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)
Current Assets
Off-Price Markdowns
Financial Leverage Ratio
22. First price or Manufacturers suggestet Retal Price (MSRP)
Pricing Strategies
Original Price
Retail Price Formula
Operating Expenses
23. Usually lower than original - but held for longer period
Regular Price
New Price
Financial Leverage Ratio
Return on Net Worth (RONW) Formula
24. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Current Assets
Markdown Cancellations
Cumulative Markup % Formula
Cumulative Markup
25. The weather - merchandise is shopworn - economic downturn
Acid Test or Quick Ratio (QR) Formula
Reasons for taking Markdowns
Profit Margin
Uncontrollable Errors
26. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Retail Inventory Method
Assets
5 Steps of Retail Inventory Method
Adage of Profitability for Retailers
27. 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
Markdown Cancellations
Profit Margin Analysis Formula
Cash Flow Formula
28. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Markdown Cancellation ($) Formula
Cost Complement Formula
Sell-Through Rate
Fixed Assets
29. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Temporary Price Reduction
Profit and Loss Statement (P&L Statement)
Cash Flow Formula
Buying Errors
30. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdowns
Balance Sheet
Off-Price Markdown Percentage Formula
Gross Margin
31. Cost Price/ (100%-markup %)
New Price
Operating Expenses
Retail Price Formula
Markdown optimization
32. Liabilities+ Owner's equity or net worth
Return on Assets
Cost of Goods Sold
Assets Formula
Pricing Strategies: Price Lining
33. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Return on Assets
Return on Net Worth
Expense Ratio Formula
Markdown Cancellations
34. In Cost Method. Merchandise sold during a time period is assumed to be sold in the order the merchandise was received. Merchandise on hand for the longest period of time is sold first. Therefore - the ending inventory reflects the items in stock for
FIFO (First in - First out)
Early Markdowns
Accounts Receivable (AR)
Debt Equity Ratio Formula
35. Price reduction for merchandise that has not lived up to buyers' expectations. Includes broken assortments of merchandise - merchandise lines that buyers no longer want to carry - shopworn goods - items that haven't sold because of an event beyond bu
LIFO (last in - first out)
Debt Equity Ratio Formula
Clearance Markdowns
Accounts Receivable (AR)
36. The number of items remaining in stock x dollar markdown
Temporary Price Reduction
Gross Margin
Financial Leverage Ratio
Markdown Cancellation ($) Formula
37. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Pricing Errors
Current Ratio (CR) Formula
Uncontrollable Errors
Financial Leverage Ratio
38. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Initial Markup (IMU)
Pricing Strategies: Price Lining
Fixed Liabilities
Pricing Errors
39. One that is just enough to move the goods
Cost of Goods Sold
Current Liabilities
Ideal Markdown
Early Markdowns
40. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Promotional Markdown
Markdown Percentage
Temporary Price Reduction
Financial Leverage Ratio
41. Short time - like 1 or 2 day sales
Net Sales
Selling Price Formula
Temporary Price Reduction
Pricing Strategies
42. Current Liabilites/ Net Worth
Initial Markup (IMU)
Current Ratio (CR) Formula
Debt Equity Ratio Formula
Return on Assets
43. 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
Adage of Profitability for Retailers
LIFO (last in - first out)
Reasons for taking Markdowns
GMROII (Gross Margin Return on Inventory Investment)
44. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
GMROII (Gross Margin Return on Inventory Investment)
Pricing Depends on 2 factors
Markdown Cancellations
Reasons for taking Markdowns
45. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Clearance Markdowns
Cost of Goods Sold (COGS) Formula
Price Sensitivity
Off-Price Markdowns
46. Cash Received by the retailer-cash leaving the retailer
Net Sales
Markdown optimization
Cash Flow Formula
5 Steps of Retail Inventory Method
47. Total Markup on all goods on hand/ retail price of all goods on hand
Pricing Strategies: Price Lining
The Cost Method
Cumulative Markup % Formula
Planned Initial Markup % Formula
48. Net Profit After Taxes/ Total Assets
Return on Assets (ROA) Formul
Markdown optimization
Cost Complement Formula
Balance Sheet
49. The cost of merchandise that was sold (including the method that was used to determine cost)
Financial Leverage Ratio Formula
Turnover Rate Formula
Forced Obsolescence
Cost of Goods Sold
50. 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
New Price
Profit Margin
Profit and Loss Statement (P&L Statement)
Loss-Leader