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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. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Cost Complement Formula
Net Sales
Profit Margin Analysis Formula
2. Improper displays - merchandise returns due to high pressure selling
Clearance Markdowns
Pricing Strategies: Price Lining
Inventory
Promotion Errors
3. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Pricing Strategies: Price Zones
Net Profit
Cost Complement Formula
Markdown Cancellations
4. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Net Sales
Fixed Assets
Markdown Cancellations
Markdown
5. The prices from lowest to highest that are carried within a merchandise category
Expense Ratio Formula
Cumulative Markup % Formula
Cost Complement Formula
Pricing Strategies: Price Ranges
6. Sales for the period/ average inventory
Turnover Rate Formula
Ideal Markdown
Cash Flow Formula
Current Liabilities
7. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Forced Obsolescence
Turnover Rate Formula
Accounts Receivable (AR)
Return on Assets
8. First price or Manufacturers suggestet Retal Price (MSRP)
Accounts Receivable (AR)
Original Price
Depreciation
Profit Margin
9. Price is changed (up or down)
Return on Net Worth (RONW) Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Assets
New Price
10. 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
Pricing Strategies: Price Zones
Late Markdowns
LIFO (last in - first out)
Fixed Liabilities
11. The energizing force that fuels and sustains our economic system
Current Ratio (CR) Formula
Profit and Loss Statement (P&L Statement)
Profit
Price Sensitivity
12. 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
Adage of Profitability for Retailers
Debt Equity Ratio
Cumulative Markup % Formula
GMROII (Gross Margin Return on Inventory Investment)
13. The retailers financial condition at a specific point in time
Balance Sheet
Acid test or Quick Ratio
Late Markdowns
Financial Leverage Ratio Formula
14. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
Cumulative Markup % Formula
Markup % of Retail Formula
Markdown Percentage
15. 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
GMROII (Gross Margin Return on Inventory Investment)
Return on Assets (ROA) Formul
Promotional Markdown
Markdown Cancellations
16. Short time - like 1 or 2 day sales
Clearance Markdowns
Temporary Price Reduction
Promotion Errors
Markdown Cancellations
17. 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
Pricing Strategies: Price Zones
Expense Ratio
FIFO (First in - First out)
Planned Initial Markup % Formula
18. 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.
Return on Sales
Inventory
Return on Net Worth (RONW) Formula
Clearance Markdowns
19. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Pricing Strategies: Price Ranges
Sell-Through Rate
Return on Net Worth
Early Markdowns
20. 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
Late Markdowns
Markdown Optimization
Turnover Rate Formula
21. Cash Received by the retailer-cash leaving the retailer
Inventory
Acid Test or Quick Ratio (QR) Formula
Promotion Errors
Cash Flow Formula
22. Total Markup on all goods on hand/ retail price of all goods on hand
Liabilities
Markdown Cancellations
Gross Margin Return on Inventory Investment-GMROI Formula
Cumulative Markup % Formula
23. One that is just enough to move the goods
Markup % of Cost Formula
Profit Margin
GMROII (Gross Margin Return on Inventory Investment)
Ideal Markdown
24. Usually lower than original - but held for longer period
Dollar Markdown Formula
Profit and Loss Statement (P&L Statement)
Return on Net Worth
Regular Price
25. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Initial Markup (IMU)
Profit and Loss Statement (P&L Statement)
Return on Net Worth (RONW) Formula
Forced Obsolescence
26. Having the right merchandise - at the right time - for the right price - in the right place
Initial Markup (IMU)
Debt Equity Ratio Formula
Acid Test or Quick Ratio (QR) Formula
Adage of Profitability for Retailers
27. Dollar markup ($)/ cost price ($)
Pricing Depends on 2 factors
Markup % of Cost Formula
Adage of Profitability for Retailers
Markdown Cancellations
28. Costs involved in running the business
Adage of Profitability for Retailers
Markdown Cancellation ($) Formula
Current Ratio (CR) Formula
Operating Expenses
29. Cost Price/ (100%-markup %)
Return on Sales
Retail Price Formula
Assets Formula
Retail Inventory Method
30. Evaluates the managament of capital
Regular Price
Original Price
Return on Sales
GMROII (Gross Margin Return on Inventory Investment)
31. Based on a calculation commonly represented as a percentage - comparing the amount of inventory a retailer receives from a manufacturer or supplier against what is actually sold to the consumer
Balance Sheet
Sell-Through Rate
Profit and Loss Statement (P&L Statement)
Markup % of Cost Formula
32. Dollar markup ($)/ retail price ($)
Net Sales
Markup % of Retail Formula
Regular Price
Current Assets
33. Ranges of prices that appeals for a particular group of consumers
Late Markdowns
Profit Margin
Net Profit
Pricing Strategies: Price Zones
34. Merchandise will sell at highest price longer period of time - appear exclusive - sale of goods at regular price is not disrupted - greater amount of goods can be accumulated and then marked down.
Net Profit
Turnover Rate Formula
Late Markdowns
Profit
35. Liabilities+ Owner's equity or net worth
Assets Formula
Regular Price
Net Sales
Fixed Liabilities
36. The higher the ratio the quicker current liabilities can be paid. This ratio also indicates the margin of safety a retailer has on hand to cover possible shrinkages
Current Ratio
Inventory
Pricing Depends on 2 factors
FIFO (First in - First out)
37. 1. Determine merchandise available for sale at both cost and retail prices. 2.Calculate the cost to retail complement or percentage relationship of the cost of merchandise to the selling price. 3. Subtract markdowns taken during the period. 4. Determ
5 Steps of Retail Inventory Method
Gross Margin
Current Liabilities
Markdown
38. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
Assets Formula
Operating Expenses
Profit
39. The cost of merchandise that was sold (including the method that was used to determine cost)
Debt Equity Ratio
Markdown Optimization
Cost of Goods Sold
Current Ratio
40. Price Lining - price zones - price ranges
Late Markdowns
Cash Flow Formula
Initial Markup (IMU)
Pricing Strategies
41. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Clearance Markdowns
Pricing Depends on 2 factors
Uncontrollable Errors
Retail Inventory Method
42. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Cost of Goods Sold
Markup % of Cost Formula
Fixed Assets
Markdown optimization
43. 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
Profit Margin
Selling Price Formula
FIFO (First in - First out)
Markdown Cancellation ($) Formula
44. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Markdown Optimization
Fixed Liabilities
Initial Markup (IMU)
Retail Inventory Method
45. Financial debts incurred by a retailer
Liabilities
Fixed Liabilities
Markdown Cancellations
Retail Inventory Method
46. Amount of markdown usually less - take the loss early will be easier - strengthen goodwill - replenish stock in lower price lines - leads to higher stock turnover - higher likelihood merchandise will sell in a timely manner
Early Markdowns
Markdown Cancellation ($) Formula
Profit Margin
Net Sales
47. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Initial Markup (IMU)
Pricing Strategies
Markdown Percentage
48. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Regular Price
Return on Net Worth (RONW) Formula
Off-Price Markdowns
Off-Price Markdown Percentage Formula
49. Current Assets/ Current Liabilities
Current Ratio (CR) Formula
Reasons for taking Markdowns
Current Assets
Return on Net Worth
50. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Current Ratio (CR) Formula
Markdown Cancellation ($) Formula
Fixed Liabilities
Gross Margin Return on Inventory Investment-GMROI Formula