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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. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Current Liabilities
Off-Price Markdowns
Cash Flow Formula
Expense Ratio Formula
2. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Fixed Liabilities
Net Profit
Fixed Assets
Profit and Loss Statement (P&L Statement)
3. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
GMROII (Gross Margin Return on Inventory Investment)
Fixed Assets
Current Assets
Turnover Rate Formula
4. 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.
Regular Price
Current Ratio (CR) Formula
Accounts Receivable (AR)
Inventory
5. Buying errors - promotion errors - pricing errors - uncontrollable errors
Accounts Receivable (AR)
Price Sensitivity
Operating Expenses
Reasons for taking Markdowns
6. 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.
Pricing Errors
Accounts Receivable (AR)
Markdown optimization
Buying Errors
7. Can be transformed simply and rapidly into cash
Current Assets
Markdown Percentage Formula
Adage of Profitability for Retailers
Expense Ratio Formula
8. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Pricing Strategies: Price Ranges
Expense Ratio
Net Profit
Depreciation
9. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Cumulative Markup % Formula
Price Sensitivity
Markdown optimization
LIFO (last in - first out)
10. Net Profit After Taxes/ Net Worth
Pricing Strategies: Price Ranges
Markup
Return on Net Worth (RONW) Formula
Selling Price Formula
11. The prices from lowest to highest that are carried within a merchandise category
Promotion Errors
Pricing Strategies: Price Ranges
Pricing Strategies: Price Zones
Profit Margin
12. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Strategies: Price Zones
Forced Obsolescence
Profit Margin
13. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Return on Sales
Cash Flow Formula
Ideal Markdown
Pricing Strategies: Price Lining
14. Usually lower than original - but held for longer period
Buying Errors
Markdown Cancellations
Regular Price
Off-Price Markdowns
15. 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
Debt Equity Ratio Formula
Expense Ratio
The Cost Method
Profit
16. Net dollar markdown/ net dollar selling price
Current Assets
LIFO (last in - first out)
Markdown Percentage Formula
Markdown
17. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Return on Net Worth (RONW) Formula
Cumulative Markup
Markdown Cancellations
Markdown Percentage
18. Cash Received by the retailer-cash leaving the retailer
Pricing Strategies
Cash Flow Formula
Fixed Assets
Profit Margin
19. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Profit Margin Analysis Formula
Pricing Depends on 2 factors
Buying Errors
Return on Net Worth (RONW) Formula
20. The cost of merchandise that was sold (including the method that was used to determine cost)
5 Steps of Retail Inventory Method
Price Sensitivity
Cost of Goods Sold
Markdown optimization
21. Short time - like 1 or 2 day sales
Financial Leverage Ratio Formula
Acid test or Quick Ratio
Temporary Price Reduction
Planned Initial Markup % Formula
22. Financial debts incurred by a retailer
Liabilities
Promotion Errors
Gross Margin Return on Inventory Investment-GMROI Formula
Return on Sales
23. Total Expenses/ Net Sales
Planned Initial Markup % Formula
Expense Ratio Formula
New Price
Inventory
24. Having the right merchandise - at the right time - for the right price - in the right place
Cumulative Markup % Formula
Adage of Profitability for Retailers
Promotion Errors
Profit
25. Dollar markup ($)/ retail price ($)
Retail Price Formula
Acid test or Quick Ratio
Return on Assets (ROA) Formul
Markup % of Retail Formula
26. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Regular Price
Markdown Optimization
Markdown Cancellations
Cost Complement Formula
27. The number of items remaining in stock x dollar markdown
Acid test or Quick Ratio
Markdown Cancellation ($) Formula
Debt Equity Ratio Formula
Net Profit
28. The awareness of the consumer to what they perceive to be the window of cost within which they will buy a particular product or service
Assets
Price Sensitivity
Cost Complement Formula
Markdown Cancellations
29. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Planned Initial Markup % Formula
Pricing Depends on 2 factors
Off-Price Markdown Percentage Formula
Expense Ratio Formula
30. 1. Determine merchandise available for sale at both cost and retail prices. 2.Calculate the cost to retail complement or percentage relationship of the cost of merchandise to the selling price. 3. Subtract markdowns taken during the period. 4. Determ
Promotional Markdown
5 Steps of Retail Inventory Method
Profit
Return on Net Worth (RONW) Formula
31. Cost + Markup
Markdown Cancellations
Selling Price Formula
Cumulative Markup
Profit Margin
32. Original Retail price- markdown selling price
Dollar Markdown Formula
Acid test or Quick Ratio
Retail Inventory Method
Accounts Receivable (AR)
33. Costs involved in running the business
Inventory
Sell-Through Rate
Operating Expenses
Profit Margin
34. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Acid Test or Quick Ratio (QR) Formula
Markdown Cancellation ($) Formula
Operating Expenses
35. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown
GMROII (Gross Margin Return on Inventory Investment)
Return on Net Worth
The Cost Method
36. 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
Depreciation
Pricing Strategies: Price Lining
Sell-Through Rate
Expense Ratio
37. 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.
Profit and Loss Statement (P&L Statement)
Operating Expenses
Pricing Strategies
Promotional Markdown
38. Priced too high initially - priced too low - selling price of competitors
Sell-Through Rate
Financial Leverage Ratio
Depreciation
Pricing Errors
39. 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
Dollar Markdown Formula
Current Liabilities
LIFO (last in - first out)
Pricing Strategies: Price Zones
40. Sales less cost of goods sold
Pricing Strategies
Price Sensitivity
Reasons for taking Markdowns
Gross Margin
41. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Liabilities
GMROII (Gross Margin Return on Inventory Investment)
Gross Margin
42. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Markup % of Retail Formula
LIFO (last in - first out)
Financial Leverage Ratio
43. Sales for the period/ average inventory
Promotion Errors
Debt Equity Ratio Formula
Fixed Assets
Turnover Rate Formula
44. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Selling Price Formula
Liabilities
Initial Markup (IMU)
Acid Test or Quick Ratio (QR) Formula
45. What the retailer owns in monetary value
Liabilities
Assets
Financial Leverage Ratio
Current Liabilities
46. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Markdown Optimization
Off-Price Markdown Percentage Formula
Dollar Markdown Formula
47. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
New Price
Regular Price
Cumulative Markup % Formula
Cost of Goods Sold (COGS) Formula
48. Promotional markdown that involves selling at or near cost for promotional purposes
Pricing Strategies: Price Zones
Cost Complement Formula
Loss-Leader
Markdown Cancellations
49. Revenues received by a retailer
Markup % of Cost Formula
Balance Sheet
Net Sales
Adage of Profitability for Retailers
50. (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%
Retail Price Formula
Return on Assets
Inventory
Planned Initial Markup % Formula