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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. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Sell-Through Rate
Cumulative Markup % Formula
Fixed Liabilities
Current Ratio (CR) Formula
2. 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)
Operating Expenses
Clearance Markdowns
Current Liabilities
3. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Off-Price Markdowns
Cumulative Markup % Formula
Selling Price Formula
Depreciation
4. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Expense Ratio Formula
Markdown Cancellation ($) Formula
Return on Net Worth
5. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
5 Steps of Retail Inventory Method
Pricing Strategies: Price Lining
Sell-Through Rate
6. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Markdown Cancellations
Current Liabilities
Acid test or Quick Ratio
Profit and Loss Statement (P&L Statement)
7. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Markdown Percentage Formula
Price Sensitivity
Pricing Strategies: Price Lining
Turnover Rate Formula
8. Liabilities+ Owner's equity or net worth
Markup
Dollar Markdown Formula
Assets Formula
Original Price
9. Based on a calculation commonly represented as a percentage - comparing the amount of inventory a retailer receives from a manufacturer or supplier against what is actually sold to the consumer
Profit Margin
Acid Test or Quick Ratio (QR) Formula
Balance Sheet
Sell-Through Rate
10. Evaluates the managament of capital
Return on Sales
Return on Assets
Acid test or Quick Ratio
Pricing Strategies: Price Zones
11. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Cancellation ($) Formula
Reasons for taking Markdowns
Pricing Strategies: Price Ranges
Markdown Percentage
12. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Cost of Goods Sold
Sell-Through Rate
Financial Leverage Ratio Formula
13. 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
Markdown Cancellation ($) Formula
Markup
Profit Margin
14. Price is changed (up or down)
Accounts Receivable (AR)
New Price
Planned Initial Markup % Formula
Expense Ratio Formula
15. Financial debts incurred by a retailer
Liabilities
Temporary Price Reduction
Assets Formula
Markup
16. Cost Price/ (100%-markup %)
Return on Net Worth
Retail Price Formula
Markdown Optimization
Late Markdowns
17. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Buying Errors
Current Ratio
Return on Assets
Off-Price Markdowns
18. Cash Received by the retailer-cash leaving the retailer
Expense Ratio
Retail Inventory Method
Cash Flow Formula
Net Profit
19. 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
Return on Net Worth (RONW) Formula
5 Steps of Retail Inventory Method
Depreciation
Cumulative Markup % Formula
20. 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.
Markdown optimization
Acid test or Quick Ratio
Liabilities
Late Markdowns
21. The retailers financial condition at a specific point in time
Fixed Liabilities
Reasons for taking Markdowns
Cost Complement Formula
Balance Sheet
22. Costs involved in running the business
Pricing Strategies: Price Lining
Operating Expenses
Balance Sheet
Accounts Receivable (AR)
23. Original Retail price- markdown selling price
Retail Inventory Method
Profit Margin Analysis Formula
Dollar Markdown Formula
Planned Initial Markup % Formula
24. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Financial Leverage Ratio
FIFO (First in - First out)
Off-Price Markdowns
Off-Price Markdown Percentage Formula
25. Promotional markdown that involves selling at or near cost for promotional purposes
Acid test or Quick Ratio
Loss-Leader
Pricing Strategies
Net Sales
26. Priced too high initially - priced too low - selling price of competitors
Ideal Markdown
Pricing Errors
Inventory
Return on Net Worth (RONW) Formula
27. 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)
Return on Net Worth
Adage of Profitability for Retailers
Profit
28. Can be transformed simply and rapidly into cash
Net Sales
Current Assets
Buying Errors
Markup % of Cost Formula
29. 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)
Temporary Price Reduction
Markdown
Current Ratio (CR) Formula
30. 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
Markup % of Cost Formula
Fixed Liabilities
Markdown optimization
Debt Equity Ratio
31. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Balance Sheet
Original Price
Markup % of Cost Formula
32. Usually lower than original - but held for longer period
Clearance Markdowns
Regular Price
Expense Ratio
Fixed Liabilities
33. Current Assets/ Current Liabilities
Fixed Assets
Cost Complement Formula
Financial Leverage Ratio
Current Ratio (CR) Formula
34. 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
Current Ratio (CR) Formula
Sell-Through Rate
LIFO (last in - first out)
Regular Price
35. 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.
Depreciation
Accounts Receivable (AR)
Current Ratio (CR) Formula
Reasons for taking Markdowns
36. What the retailer owns in monetary value
Current Assets
Planned Initial Markup % Formula
Assets
Financial Leverage Ratio
37. (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
Profit
Depreciation
Debt Equity Ratio
38. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Current Ratio (CR) Formula
Selling Price Formula
Retail Inventory Method
Return on Assets
39. 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
The Cost Method
Markdown Optimization
GMROII (Gross Margin Return on Inventory Investment)
Off-Price Markdowns
40. Sales for the period/ average inventory
Early Markdowns
Promotional Markdown
Turnover Rate Formula
Depreciation
41. Dollar markup ($)/ retail price ($)
Markdown Optimization
5 Steps of Retail Inventory Method
Pricing Strategies
Markup % of Retail Formula
42. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Fixed Liabilities
Assets
Cost of Goods Sold
43. Total Markup on all goods on hand/ retail price of all goods on hand
Markup % of Cost Formula
Cumulative Markup % Formula
Balance Sheet
Markdown optimization
44. Dollar markup ($)/ cost price ($)
Off-Price Markdowns
Markup % of Cost Formula
Cumulative Markup % Formula
Acid test or Quick Ratio
45. 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.
Late Markdowns
Original Price
Markup
Inventory
46. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Retail Inventory Method
Assets Formula
Buying Errors
Return on Assets
47. Having the right merchandise - at the right time - for the right price - in the right place
Adage of Profitability for Retailers
Pricing Strategies: Price Ranges
Profit
Reasons for taking Markdowns
48. (Cash + Accounts Receivable) / Current Liabilities
Planned Initial Markup % Formula
Acid Test or Quick Ratio (QR) Formula
Fixed Liabilities
Current Assets
49. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Dollar Markdown Formula
Fixed Liabilities
Assets Formula
Markdown
50. Buying errors - promotion errors - pricing errors - uncontrollable errors
Debt Equity Ratio Formula
Current Liabilities
Reasons for taking Markdowns
New Price