Test your basic knowledge |

Retail Financials

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. Wrong Merchandise - odd assortment colors/sizes - seasonal goods






2. 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.






3. Price is changed (up or down)






4. (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%






5. The energizing force that fuels and sustains our economic system






6. Buying errors - promotion errors - pricing errors - uncontrollable errors






7. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.






8. Amount of markdown usually less - take the loss early will be easier - strengthen goodwill - replenish stock in lower price lines - leads to higher stock turnover - higher likelihood merchandise will sell in a timely manner






9. Net Profit/ Net Sales






10. Merchandise Available for sale at cost/ Merchandise available for sale at retail






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






12. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)






13. Sales less cost of goods sold






14. 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






15. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)






16. 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






17. Net Profit After Taxes/ Net Worth






18. First price or Manufacturers suggestet Retal Price (MSRP)






19. (gross margin % x Turnover) / (100%-markup %)






20. Indicates gross margin derived from the sales of merchandise and it's ability to cover operating expenses. Helps a retailer determine how much rent they should pay - what salary the owner should draw - and how much they should pay their associates.






21. 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.






22. Having the right merchandise - at the right time - for the right price - in the right place






23. Cost Price/ (100%-markup %)






24. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit






25. 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






26. Liabilities+ Owner's equity or net worth






27. Costs involved in running the business






28. Sales for the period/ average inventory






29. 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.






30. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down






31. Current Assets/ Current Liabilities






32. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)






33. Price Lining - price zones - price ranges






34. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)






35. Original Retail price- markdown selling price






36. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item






37. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.






38. Current Liabilites/ Net Worth






39. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.






40. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model






41. Usually lower than original - but held for longer period






42. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.






43. Total Assets/ Net Worth






44. Total Markup on all goods on hand/ retail price of all goods on hand






45. Net dollar markdown/ net dollar selling price






46. 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.






47. Priced too high initially - priced too low - selling price of competitors






48. 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






49. 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.






50. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down