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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. Sales less cost of goods sold
Gross Margin
Temporary Price Reduction
Liabilities
Regular Price
2. Dollar markup ($)/ cost price ($)
Markdown Cancellations
Markup % of Cost Formula
Markdown Optimization
Markdown Percentage Formula
3. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Assets
Return on Net Worth (RONW) Formula
Markup % of Cost Formula
4. What the retailer owns in monetary value
Assets
Markdown Percentage
Return on Assets (ROA) Formul
Fixed Liabilities
5. 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.
Regular Price
Selling Price Formula
Fixed Assets
Markup
6. Current Assets/ Current Liabilities
Profit
Selling Price Formula
Current Ratio (CR) Formula
Return on Assets (ROA) Formul
7. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Forced Obsolescence
Accounts Receivable (AR)
Net Profit
LIFO (last in - first out)
8. Sales for the period/ average inventory
Return on Assets (ROA) Formul
Turnover Rate Formula
Depreciation
Clearance Markdowns
9. Price is changed (up or down)
Expense Ratio
Current Liabilities
New Price
Return on Net Worth (RONW) Formula
10. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage Formula
Retail Inventory Method
Liabilities
Markdown Percentage
11. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
LIFO (last in - first out)
Markdown optimization
Promotional Markdown
Cash Flow Formula
12. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Retail Inventory Method
Cost Complement Formula
Assets
Adage of Profitability for Retailers
13. 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.
Dollar Markdown Formula
Profit Margin Analysis Formula
Fixed Liabilities
Inventory
14. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Acid test or Quick Ratio
Gross Margin
Fixed Liabilities
Return on Net Worth
15. Liabilities+ Owner's equity or net worth
Assets Formula
Current Liabilities
Sell-Through Rate
Reasons for taking Markdowns
16. Price Lining - price zones - price ranges
Pricing Strategies
Acid test or Quick Ratio
New Price
Dollar Markdown Formula
17. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Price Sensitivity
Return on Net Worth
Cost of Goods Sold (COGS) Formula
Net Profit
18. Dollar markup ($)/ retail price ($)
Current Liabilities
Fixed Liabilities
Return on Assets (ROA) Formul
Markup % of Retail Formula
19. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Pricing Depends on 2 factors
Forced Obsolescence
Clearance Markdowns
Cumulative 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.
Pricing Strategies: Price Zones
Debt Equity Ratio Formula
Retail Price Formula
Expense Ratio
21. 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
Cumulative Markup
Current Assets
Cost Complement Formula
LIFO (last in - first out)
22. 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
Forced Obsolescence
GMROII (Gross Margin Return on Inventory Investment)
Return on Net Worth
23. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Net Profit
Current Assets
GMROII (Gross Margin Return on Inventory Investment)
24. 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 Optimization
Pricing Depends on 2 factors
Original Price
Sell-Through Rate
25. Cost Price/ (100%-markup %)
Retail Price Formula
Off-Price Markdown Percentage Formula
Fixed Assets
Gross Margin Return on Inventory Investment-GMROI Formula
26. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Profit and Loss Statement (P&L Statement)
Markdown Optimization
Pricing Errors
Markdown Percentage Formula
27. Original Retail price- markdown selling price
Retail Inventory Method
Dollar Markdown Formula
Pricing Strategies: Price Ranges
Liabilities
28. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Net Profit
Markdown Percentage Formula
Off-Price Markdowns
Selling Price Formula
29. 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
Off-Price Markdowns
Cost of Goods Sold (COGS) Formula
Markup % of Retail Formula
30. Cost + Markup
Selling Price Formula
Pricing Strategies: Price Ranges
Off-Price Markdown Percentage Formula
Original Price
31. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Markdown Percentage Formula
Temporary Price Reduction
Cash Flow Formula
Initial Markup (IMU)
32. The energizing force that fuels and sustains our economic system
Liabilities
Promotional Markdown
Assets Formula
Profit
33. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Acid test or Quick Ratio
Turnover Rate Formula
Return on Assets
Pricing Depends on 2 factors
34. First price or Manufacturers suggestet Retal Price (MSRP)
Fixed Liabilities
Original Price
Markup
The Cost Method
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
Return on Net Worth (RONW) Formula
Gross Margin
Inventory
5 Steps of Retail Inventory Method
36. 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 (CR) Formula
Financial Leverage Ratio
Original Price
Pricing Strategies: Price Lining
37. Total Assets/ Net Worth
Dollar Markdown Formula
Financial Leverage Ratio Formula
Inventory
Forced Obsolescence
38. 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
Clearance Markdowns
Promotional Markdown
Temporary Price Reduction
Reasons for taking Markdowns
39. 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
Early Markdowns
Financial Leverage Ratio
Markdown optimization
Buying Errors
40. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown
Planned Initial Markup % Formula
Current Ratio
Cost of Goods Sold
41. The retailers financial condition at a specific point in time
Balance Sheet
Reasons for taking Markdowns
Markup % of Retail Formula
Return on Sales
42. 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.
Financial Leverage Ratio Formula
Profit and Loss Statement (P&L Statement)
Markup
Acid test or Quick Ratio
43. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Markdown Cancellations
Depreciation
Price Sensitivity
Current Liabilities
44. 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
Reasons for taking Markdowns
FIFO (First in - First out)
5 Steps of Retail Inventory Method
Profit and Loss Statement (P&L Statement)
45. Improper displays - merchandise returns due to high pressure selling
Original Price
Return on Net Worth (RONW) Formula
Promotion Errors
Dollar Markdown Formula
46. Having the right merchandise - at the right time - for the right price - in the right place
Expense Ratio
Adage of Profitability for Retailers
Dollar Markdown Formula
Pricing Depends on 2 factors
47. Buying errors - promotion errors - pricing errors - uncontrollable errors
Markdown Cancellations
Promotional Markdown
Liabilities
Reasons for taking Markdowns
48. Revenues received by a retailer
Current Ratio
The Cost Method
Net Sales
Pricing Depends on 2 factors
49. Can be transformed simply and rapidly into cash
Debt Equity Ratio
Regular Price
Current Assets
Depreciation
50. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Liabilities
Markdown Percentage
Promotion Errors