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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. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Return on Net Worth
Net Sales
Pricing Depends on 2 factors
2. Financial debts incurred by a retailer
Liabilities
Retail Inventory Method
Promotion Errors
Cumulative Markup
3. Net dollar markdown/ net dollar selling price
Cost of Goods Sold
Reasons for taking Markdowns
Markdown Percentage Formula
Profit Margin
4. Revenues received by a retailer
Acid test or Quick Ratio
Loss-Leader
Cost Complement Formula
Net Sales
5. Dollar markup ($)/ retail price ($)
Markdown Optimization
Uncontrollable Errors
Markup % of Retail Formula
Cost of Goods Sold
6. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Markdown Percentage
Pricing Strategies: Price Lining
Pricing Strategies: Price Ranges
Cost of Goods Sold (COGS) Formula
7. 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
Initial Markup (IMU)
Retail Price Formula
Inventory
Profit Margin
8. Promotional markdown that involves selling at or near cost for promotional purposes
Gross Margin Return on Inventory Investment-GMROI Formula
Loss-Leader
Return on Net Worth (RONW) Formula
Retail Price Formula
9. (gross margin % x Turnover) / (100%-markup %)
Markdown optimization
Return on Sales
Gross Margin Return on Inventory Investment-GMROI Formula
Promotional Markdown
10. 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.
Early Markdowns
Pricing Errors
Profit Margin
Late Markdowns
11. Net Profit After Taxes/ Net Worth
Operating Expenses
Inventory
Promotion Errors
Return on Net Worth (RONW) Formula
12. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Current Ratio
Pricing Errors
Regular Price
13. 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.
Pricing Strategies: Price Ranges
Uncontrollable Errors
Acid test or Quick Ratio
Original Price
14. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Pricing Strategies
Markdown Percentage Formula
Markdown Cancellation ($) Formula
Return on Net Worth
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
Profit
Dollar Markdown Formula
GMROII (Gross Margin Return on Inventory Investment)
16. 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.
Pricing Strategies
Financial Leverage Ratio
Current Assets
Expense Ratio
17. 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.
Cash Flow Formula
Inventory
Cost of Goods Sold
Markdown optimization
18. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Clearance Markdowns
Ideal Markdown
Current Liabilities
Adage of Profitability for Retailers
19. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Markdown optimization
Depreciation
LIFO (last in - first out)
Cumulative Markup % Formula
20. What the retailer owns in monetary value
Markdown
Assets
Cumulative Markup % Formula
Promotional Markdown
21. Net Profit After Taxes/ Total Assets
Profit Margin Analysis Formula
Turnover Rate Formula
Current Ratio (CR) Formula
Return on Assets (ROA) Formul
22. 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
LIFO (last in - first out)
Promotion Errors
Current Ratio
Net Sales
23. Cost Price/ (100%-markup %)
Markdown optimization
Cash Flow Formula
Turnover Rate Formula
Retail Price Formula
24. The energizing force that fuels and sustains our economic system
Cost of Goods Sold (COGS) Formula
Promotional Markdown
Markup % of Cost Formula
Profit
25. Current Assets/ Current Liabilities
Current Ratio (CR) Formula
Late Markdowns
Markup
Markup % of Retail Formula
26. Sales for the period/ average inventory
Markup % of Cost Formula
Acid Test or Quick Ratio (QR) Formula
Return on Net Worth
Turnover Rate Formula
27. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellation ($) Formula
Markdown Optimization
Pricing Strategies
Markdown Cancellations
28. Total Expenses/ Net Sales
Original Price
Early Markdowns
Expense Ratio Formula
Markdown
29. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Net Profit
Markdown
Inventory
Return on Sales
30. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Markup % of Cost Formula
Off-Price Markdowns
The Cost Method
Pricing Errors
31. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Markdown Optimization
Cost of Goods Sold
Loss-Leader
32. The prices from lowest to highest that are carried within a merchandise category
Planned Initial Markup % Formula
Assets Formula
Pricing Strategies: Price Ranges
Return on Net Worth (RONW) Formula
33. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
5 Steps of Retail Inventory Method
Return on Net Worth
Financial Leverage Ratio Formula
34. Price Lining - price zones - price ranges
Planned Initial Markup % Formula
Assets
Pricing Strategies
Current Ratio
35. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Markup % of Retail Formula
Ideal Markdown
GMROII (Gross Margin Return on Inventory Investment)
36. 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
Original Price
Current Ratio (CR) Formula
Markdown
FIFO (First in - First out)
37. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Operating Expenses
Net Profit
Profit
Current Assets
38. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
Markdown Percentage Formula
Late Markdowns
Expense Ratio
39. Total Assets/ Net Worth
Dollar Markdown Formula
Buying Errors
Financial Leverage Ratio Formula
Net Sales
40. Evaluates the managament of capital
Return on Sales
Debt Equity Ratio Formula
Profit and Loss Statement (P&L Statement)
Initial Markup (IMU)
41. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
New Price
Financial Leverage Ratio
Return on Net Worth
Cost Complement Formula
42. Can be transformed simply and rapidly into cash
Current Assets
Ideal Markdown
Net Profit
Markdown Cancellation ($) Formula
43. The retailers financial condition at a specific point in time
Promotion Errors
Balance Sheet
Original Price
Expense Ratio
44. 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
Markdown Percentage Formula
Pricing Strategies
5 Steps of Retail Inventory Method
Current Assets
45. 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
Markdown
GMROII (Gross Margin Return on Inventory Investment)
Early Markdowns
Sell-Through Rate
46. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Forced Obsolescence
Loss-Leader
Markdown Percentage
Depreciation
47. 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
Return on Net Worth
Early Markdowns
Uncontrollable Errors
Adage of Profitability for Retailers
48. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Buying Errors
Reasons for taking Markdowns
Markdown Percentage Formula
49. First price or Manufacturers suggestet Retal Price (MSRP)
Financial Leverage Ratio
Original Price
Current Liabilities
Turnover Rate Formula
50. 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
Price Sensitivity
Reasons for taking Markdowns
Financial Leverage Ratio Formula
Inventory