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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. Dollar markup ($)/ retail price ($)
Accounts Receivable (AR)
Markup % of Retail Formula
Pricing Errors
Markdown Percentage
2. What the retailer owns in monetary value
Current Assets
Assets
Return on Net Worth
Current Ratio
3. Current Assets/ Current Liabilities
Clearance Markdowns
Markup
Off-Price Markdown Percentage Formula
Current Ratio (CR) Formula
4. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
FIFO (First in - First out)
Operating Expenses
Current Liabilities
Cumulative Markup
5. 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
Return on Sales
Fixed Assets
Current Ratio
Original Price
6. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Promotional Markdown
Cumulative Markup % Formula
Early Markdowns
Net Profit
7. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Reasons for taking Markdowns
Markdown Cancellation ($) Formula
Gross Margin
Markdown optimization
8. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Buying Errors
Return on Assets
Markdown Cancellations
9. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Profit and Loss Statement (P&L Statement)
Markdown
Current Assets
Current Liabilities
10. Evaluates the managament of capital
Profit Margin
Return on Sales
Return on Net Worth (RONW) Formula
Debt Equity Ratio Formula
11. 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
Pricing Strategies: Price Ranges
Return on Net Worth (RONW) Formula
Initial Markup (IMU)
GMROII (Gross Margin Return on Inventory Investment)
12. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Pricing Errors
Cash Flow Formula
Initial Markup (IMU)
Acid Test or Quick Ratio (QR) Formula
13. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Cost of Goods Sold
Gross Margin Return on Inventory Investment-GMROI Formula
Gross Margin
Markdown Cancellations
14. Price is changed (up or down)
New Price
Current Assets
Markup
Sell-Through Rate
15. (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
Gross Margin Return on Inventory Investment-GMROI Formula
Financial Leverage Ratio
Dollar Markdown Formula
16. Usually lower than original - but held for longer period
Forced Obsolescence
Temporary Price Reduction
Cumulative Markup
Regular Price
17. Promotional markdown that involves selling at or near cost for promotional purposes
Loss-Leader
Financial Leverage Ratio Formula
Pricing Errors
Price Sensitivity
18. Net dollar markdown/ net dollar selling price
Gross Margin Return on Inventory Investment-GMROI Formula
Depreciation
Markdown Percentage Formula
Pricing Strategies
19. 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.
Late Markdowns
Gross Margin Return on Inventory Investment-GMROI Formula
Price Sensitivity
Pricing Strategies: Price Lining
20. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Operating Expenses
Return on Sales
Retail Inventory Method
Profit and Loss Statement (P&L Statement)
21. Cash Received by the retailer-cash leaving the retailer
Profit Margin
Net Sales
Cash Flow Formula
Pricing Strategies: Price Lining
22. Liabilities+ Owner's equity or net worth
Markup % of Cost Formula
Net Profit
Retail Inventory Method
Assets Formula
23. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
Cash Flow Formula
Depreciation
Markup % of Retail Formula
24. 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
Buying Errors
Clearance Markdowns
Turnover Rate Formula
Initial Markup (IMU)
25. The weather - merchandise is shopworn - economic downturn
Retail Price Formula
Reasons for taking Markdowns
Operating Expenses
Uncontrollable Errors
26. Net Profit/ Net Sales
Markdown Percentage Formula
Return on Assets (ROA) Formul
Profit Margin Analysis Formula
New Price
27. Price Lining - price zones - price ranges
LIFO (last in - first out)
Markup % of Cost Formula
Pricing Strategies
Cost of Goods Sold
28. The energizing force that fuels and sustains our economic system
Original Price
Return on Assets
Profit
Retail Inventory Method
29. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Inventory
Return on Sales
Regular Price
Retail Inventory Method
30. Total Expenses/ Net Sales
Expense Ratio Formula
Acid test or Quick Ratio
Financial Leverage Ratio
Uncontrollable Errors
31. Short time - like 1 or 2 day sales
Current Ratio
Ideal Markdown
Temporary Price Reduction
Original Price
32. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Retail Price Formula
Buying Errors
Markdown
Profit
33. Priced too high initially - priced too low - selling price of competitors
Off-Price Markdowns
Profit and Loss Statement (P&L Statement)
Late Markdowns
Pricing Errors
34. Cost Price/ (100%-markup %)
Inventory
Net Profit
Retail Price Formula
Pricing Strategies: Price Ranges
35. Can be transformed simply and rapidly into cash
Current Assets
Promotion Errors
Regular Price
Markup % of Cost Formula
36. Original Retail price- markdown selling price
Retail Inventory Method
Uncontrollable Errors
Dollar Markdown Formula
Pricing Strategies: Price Ranges
37. 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
FIFO (First in - First out)
Cost of Goods Sold (COGS) Formula
New Price
Debt Equity Ratio
38. 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
The Cost Method
Price Sensitivity
Promotional Markdown
Accounts Receivable (AR)
39. 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
Liabilities
Profit Margin
Expense Ratio Formula
Depreciation
40. 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
Reasons for taking Markdowns
Current Ratio (CR) Formula
Profit Margin
FIFO (First in - First out)
41. Merchandise Available for sale at cost/ Merchandise available for sale at retail
LIFO (last in - first out)
Cost Complement Formula
Net Sales
Markdown Optimization
42. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Inventory
Return on Assets (ROA) Formul
Cumulative Markup
Markdown Percentage
43. 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.
Financial Leverage Ratio
Pricing Strategies
Markdown Percentage Formula
Inventory
44. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Planned Initial Markup % Formula
Financial Leverage Ratio Formula
Selling Price Formula
45. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Current Assets
Depreciation
Markup % of Cost Formula
Profit
46. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Return on Assets
Inventory
Current Ratio (CR) Formula
Balance Sheet
47. Improper displays - merchandise returns due to high pressure selling
Retail Inventory Method
Promotion Errors
Promotional Markdown
Cumulative Markup
48. Financial debts incurred by a retailer
Liabilities
Pricing Strategies: Price Zones
Net Sales
Pricing Errors
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.
Price Sensitivity
LIFO (last in - first out)
Accounts Receivable (AR)
Uncontrollable Errors
50. Dollar markup ($)/ cost price ($)
Expense Ratio
Markup
Markup % of Cost Formula
Adage of Profitability for Retailers