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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. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Financial Leverage Ratio
Financial Leverage Ratio Formula
The Cost Method
2. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Pricing Strategies: Price Zones
Accounts Receivable (AR)
Financial Leverage Ratio
3. (Cash + Accounts Receivable) / Current Liabilities
GMROII (Gross Margin Return on Inventory Investment)
Depreciation
Acid Test or Quick Ratio (QR) Formula
Operating Expenses
4. Short time - like 1 or 2 day sales
Markdown optimization
Temporary Price Reduction
FIFO (First in - First out)
Cumulative Markup % Formula
5. 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
Expense Ratio
Return on Net Worth
Cash Flow Formula
Early Markdowns
6. 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.
Markdown
Current Liabilities
Inventory
Uncontrollable Errors
7. 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
Depreciation
Turnover Rate Formula
Cash Flow Formula
8. Improper displays - merchandise returns due to high pressure selling
Markdown optimization
Retail Price Formula
Return on Assets
Promotion Errors
9. Having the right merchandise - at the right time - for the right price - in the right place
Return on Net Worth
Liabilities
Reasons for taking Markdowns
Adage of Profitability for Retailers
10. Original Retail price- markdown selling price
Dollar Markdown Formula
Fixed Assets
Return on Sales
New Price
11. Net Profit After Taxes/ Net Worth
Turnover Rate Formula
Return on Net Worth (RONW) Formula
Clearance Markdowns
Temporary Price Reduction
12. The retailers financial condition at a specific point in time
Fixed Assets
Balance Sheet
Ideal Markdown
Cost of Goods Sold (COGS) Formula
13. The energizing force that fuels and sustains our economic system
Profit
Pricing Depends on 2 factors
Markup
Turnover Rate Formula
14. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Late Markdowns
Fixed Liabilities
5 Steps of Retail Inventory Method
15. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Current Ratio
Return on Net Worth
Financial Leverage Ratio
Dollar Markdown Formula
16. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Profit and Loss Statement (P&L Statement)
Pricing Strategies: Price Lining
New Price
17. Liabilities+ Owner's equity or net worth
Balance Sheet
5 Steps of Retail Inventory Method
Assets Formula
Promotion Errors
18. 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.
LIFO (last in - first out)
Return on Net Worth
Assets
Accounts Receivable (AR)
19. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Depreciation
Off-Price Markdown Percentage Formula
Adage of Profitability for Retailers
20. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Return on Assets (ROA) Formul
Expense Ratio
Pricing Strategies: Price Lining
21. The number of items remaining in stock x dollar markdown
Debt Equity Ratio Formula
Markup % of Cost Formula
Markdown Cancellation ($) Formula
Planned Initial Markup % Formula
22. 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
Current Ratio
Sell-Through Rate
Inventory
Price Sensitivity
23. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Fixed Liabilities
Markup % of Retail Formula
Price Sensitivity
24. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Return on Assets
Acid Test or Quick Ratio (QR) Formula
Current Liabilities
Uncontrollable Errors
25. Can be transformed simply and rapidly into cash
Return on Net Worth (RONW) Formula
Current Assets
Markdown
Buying Errors
26. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Cost of Goods Sold
Operating Expenses
Markdown Percentage
Net Profit
27. 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
Balance Sheet
Markdown Percentage
Return on Net Worth (RONW) Formula
GMROII (Gross Margin Return on Inventory Investment)
28. 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.
Expense Ratio
Profit
Pricing Strategies: Price Zones
Regular Price
29. 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
Temporary Price Reduction
Markup
Current Ratio
Selling Price Formula
30. 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.
Depreciation
Expense Ratio Formula
Planned Initial Markup % Formula
Markup
31. 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
Temporary Price Reduction
Debt Equity Ratio
Pricing Strategies: Price Ranges
The Cost Method
32. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
5 Steps of Retail Inventory Method
Debt Equity Ratio
Return on Net Worth
Pricing Strategies: Price Zones
33. Current Assets/ Current Liabilities
Pricing Errors
Current Ratio (CR) Formula
Expense Ratio Formula
Markup
34. 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
Profit
Current Liabilities
Markdown optimization
35. 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
Gross Margin
5 Steps of Retail Inventory Method
Late Markdowns
Current Liabilities
36. What the retailer owns in monetary value
Cost of Goods Sold (COGS) Formula
Depreciation
Acid Test or Quick Ratio (QR) Formula
Assets
37. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Initial Markup (IMU)
Assets
Current Liabilities
38. Evaluates the managament of capital
Current Assets
Cumulative Markup % Formula
Initial Markup (IMU)
Return on Sales
39. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Forced Obsolescence
Markdown optimization
Current Liabilities
Gross Margin
40. Costs involved in running the business
Cumulative Markup % Formula
Cash Flow Formula
Loss-Leader
Operating Expenses
41. Cost Price/ (100%-markup %)
Assets Formula
Acid Test or Quick Ratio (QR) Formula
Promotional Markdown
Retail Price Formula
42. Buying errors - promotion errors - pricing errors - uncontrollable errors
Markdown Cancellation ($) Formula
Gross Margin
Debt Equity Ratio
Reasons for taking Markdowns
43. 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
Early Markdowns
LIFO (last in - first out)
GMROII (Gross Margin Return on Inventory Investment)
Late Markdowns
44. 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.
Acid test or Quick Ratio
Cost Complement Formula
Profit Margin Analysis Formula
Pricing Strategies: Price Ranges
45. 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
Markdown
Temporary Price Reduction
Financial Leverage Ratio
Clearance Markdowns
46. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Retail Inventory Method
Expense Ratio
Markdown Cancellations
47. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Debt Equity Ratio Formula
Late Markdowns
Pricing Strategies: Price Lining
Cost of Goods Sold (COGS) Formula
48. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Net Sales
Financial Leverage Ratio
Markdown Optimization
Clearance Markdowns
49. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Debt Equity Ratio Formula
Fixed Liabilities
Return on Assets (ROA) Formul
50. Priced too high initially - priced too low - selling price of competitors
Markdown Percentage
Pricing Errors
Liabilities
Current Assets