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Retail Financials
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. 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
5 Steps of Retail Inventory Method
Buying Errors
Fixed Assets
2. Can be transformed simply and rapidly into cash
Pricing Strategies: Price Zones
GMROII (Gross Margin Return on Inventory Investment)
Current Assets
Temporary Price Reduction
3. 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
Debt Equity Ratio
Profit
Net Sales
Markdown Percentage Formula
4. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Clearance Markdowns
Depreciation
Markdown Cancellation ($) Formula
5. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Planned Initial Markup % Formula
Loss-Leader
Markdown Cancellations
Liabilities
6. 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.
Initial Markup (IMU)
Late Markdowns
Temporary Price Reduction
New Price
7. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Loss-Leader
Current Ratio (CR) Formula
Cost of Goods Sold (COGS) Formula
Current Assets
8. Priced too high initially - priced too low - selling price of competitors
Original Price
Assets Formula
Pricing Errors
Buying Errors
9. Usually lower than original - but held for longer period
Depreciation
Cost Complement Formula
Acid test or Quick Ratio
Regular Price
10. Cost Price/ (100%-markup %)
Acid test or Quick Ratio
Retail Price Formula
Liabilities
Reasons for taking Markdowns
11. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Financial Leverage Ratio Formula
Adage of Profitability for Retailers
Inventory
12. 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.
The Cost Method
Promotional Markdown
FIFO (First in - First out)
Profit
13. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Pricing Strategies: Price Lining
Depreciation
Profit and Loss Statement (P&L Statement)
Debt Equity Ratio Formula
14. 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.
Buying Errors
Markup
Fixed Liabilities
Pricing Strategies
15. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
GMROII (Gross Margin Return on Inventory Investment)
Markdown
Uncontrollable Errors
Liabilities
16. 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
Profit
Sell-Through Rate
Reasons for taking Markdowns
Financial Leverage Ratio Formula
17. 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
Financial Leverage Ratio
Profit
Current Ratio
The Cost Method
18. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Initial Markup (IMU)
Markup
Markdown Optimization
Reasons for taking Markdowns
19. Costs involved in running the business
Financial Leverage Ratio
Operating Expenses
Markdown Percentage Formula
Pricing Strategies: Price Zones
20. Sales less cost of goods sold
Pricing Strategies
Gross Margin
Profit and Loss Statement (P&L Statement)
Initial Markup (IMU)
21. The energizing force that fuels and sustains our economic system
Net Profit
Profit
Pricing Strategies: Price Ranges
Temporary Price Reduction
22. Price Lining - price zones - price ranges
Liabilities
Expense Ratio Formula
Pricing Strategies
Markdown Cancellation ($) Formula
23. Sales for the period/ average inventory
Turnover Rate Formula
Markdown Cancellations
Pricing Strategies: Price Lining
5 Steps of Retail Inventory Method
24. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Markdown Cancellation ($) Formula
Financial Leverage Ratio
Gross Margin Return on Inventory Investment-GMROI Formula
Assets Formula
25. Current Assets/ Current Liabilities
Liabilities
Profit and Loss Statement (P&L Statement)
Assets
Current Ratio (CR) Formula
26. Cash Received by the retailer-cash leaving the retailer
Pricing Errors
Cash Flow Formula
Financial Leverage Ratio Formula
Return on Sales
27. Liabilities+ Owner's equity or net worth
Gross Margin
Adage of Profitability for Retailers
Assets Formula
Acid Test or Quick Ratio (QR) Formula
28. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Current Ratio
Net Profit
Clearance Markdowns
Markdown Percentage Formula
29. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Inventory
Ideal Markdown
Regular Price
30. Original Retail price- markdown selling price
Profit and Loss Statement (P&L Statement)
Net Profit
Markdown
Dollar Markdown Formula
31. Financial debts incurred by a retailer
Liabilities
Acid test or Quick Ratio
Uncontrollable Errors
5 Steps of Retail Inventory Method
32. The retailers financial condition at a specific point in time
Reasons for taking Markdowns
Current Ratio
Original Price
Balance Sheet
33. Net Profit After Taxes/ Total Assets
Inventory
LIFO (last in - first out)
Return on Assets (ROA) Formul
Liabilities
34. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Initial Markup (IMU)
New Price
The Cost Method
Return on Assets
35. What the retailer owns in monetary value
Assets
Debt Equity Ratio
Financial Leverage Ratio
Regular Price
36. The number of items remaining in stock x dollar markdown
Pricing Strategies: Price Ranges
Markdown Cancellation ($) Formula
Initial Markup (IMU)
Cost Complement Formula
37. 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
Pricing Depends on 2 factors
Early Markdowns
Dollar Markdown Formula
Inventory
38. (Cash + Accounts Receivable) / Current Liabilities
Return on Sales
Turnover Rate Formula
Acid test or Quick Ratio
Acid Test or Quick Ratio (QR) Formula
39. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Forced Obsolescence
Return on Assets
Markup % of Retail Formula
Assets Formula
40. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Current Assets
Pricing Strategies: Price Ranges
5 Steps of Retail Inventory Method
41. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Fixed Liabilities
Current Ratio (CR) Formula
Cost Complement Formula
Acid test or Quick Ratio
42. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Profit Margin Analysis Formula
Late Markdowns
Markup % of Retail Formula
43. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Liabilities
Temporary Price Reduction
Net Sales
44. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Temporary Price Reduction
Off-Price Markdowns
The Cost Method
45. 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
Cost of Goods Sold (COGS) Formula
Fixed Assets
Pricing Strategies: Price Zones
46. Improper displays - merchandise returns due to high pressure selling
Acid Test or Quick Ratio (QR) Formula
Promotion Errors
Adage of Profitability for Retailers
FIFO (First in - First out)
47. Ranges of prices that appeals for a particular group of consumers
FIFO (First in - First out)
Pricing Strategies: Price Zones
Return on Assets
Accounts Receivable (AR)
48. One that is just enough to move the goods
Ideal Markdown
Initial Markup (IMU)
Markdown Percentage Formula
Cumulative Markup
49. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Cost of Goods Sold (COGS) Formula
Markdown optimization
Pricing Depends on 2 factors
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%
Gross Margin Return on Inventory Investment-GMROI Formula
Planned Initial Markup % Formula
Original Price
Markdown Optimization
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