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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. 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
Acid Test or Quick Ratio (QR) Formula
Liabilities
LIFO (last in - first out)
Gross Margin Return on Inventory Investment-GMROI Formula
2. Short time - like 1 or 2 day sales
Gross Margin Return on Inventory Investment-GMROI Formula
Temporary Price Reduction
Acid Test or Quick Ratio (QR) Formula
Return on Sales
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
Markdown Percentage
Debt Equity Ratio
Retail Inventory Method
Liabilities
4. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Current Ratio (CR) Formula
Retail Inventory Method
Debt Equity Ratio
Markdown
5. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Markdown Cancellation ($) Formula
GMROII (Gross Margin Return on Inventory Investment)
Initial Markup (IMU)
LIFO (last in - first out)
6. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Balance Sheet
Sell-Through Rate
Debt Equity Ratio
Current Liabilities
7. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Gross Margin Return on Inventory Investment-GMROI Formula
Regular Price
Current Ratio
Net Profit
8. Dollar markup ($)/ retail price ($)
Markdown Percentage
Markup % of Retail Formula
Uncontrollable Errors
Pricing Strategies: Price Ranges
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
5 Steps of Retail Inventory Method
Markdown Cancellations
Pricing Strategies: Price Lining
Markdown optimization
10. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Net Profit
Turnover Rate Formula
Off-Price Markdowns
Return on Assets
11. 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
Retail Inventory Method
Markup % of Retail Formula
The Cost Method
Markdown
12. Current Assets/ Current Liabilities
Debt Equity Ratio Formula
The Cost Method
GMROII (Gross Margin Return on Inventory Investment)
Current Ratio (CR) Formula
13. 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
Profit Margin
New Price
Net Sales
5 Steps of Retail Inventory Method
14. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Promotion Errors
Pricing Strategies: Price Lining
Selling Price Formula
5 Steps of Retail Inventory Method
15. 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
LIFO (last in - first out)
Markup % of Cost Formula
Accounts Receivable (AR)
Early Markdowns
16. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown
Debt Equity Ratio Formula
Liabilities
Fixed Liabilities
17. 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
Forced Obsolescence
GMROII (Gross Margin Return on Inventory Investment)
5 Steps of Retail Inventory Method
18. Can be transformed simply and rapidly into cash
Debt Equity Ratio Formula
Retail Price Formula
Original Price
Current Assets
19. Costs involved in running the business
Profit Margin
Late Markdowns
Cost of Goods Sold (COGS) Formula
Operating Expenses
20. What the retailer owns in monetary value
Current Liabilities
Assets
Retail Price Formula
Clearance Markdowns
21. Total Expenses/ Net Sales
Clearance Markdowns
Debt Equity Ratio
Expense Ratio Formula
Ideal Markdown
22. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Dollar Markdown Formula
Depreciation
LIFO (last in - first out)
Cost Complement Formula
23. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
FIFO (First in - First out)
Markdown Percentage Formula
LIFO (last in - first out)
Return on Net Worth
24. Buying errors - promotion errors - pricing errors - uncontrollable errors
Pricing Errors
Off-Price Markdown Percentage Formula
Reasons for taking Markdowns
Pricing Strategies: Price Zones
25. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Initial Markup (IMU)
Reasons for taking Markdowns
Cumulative Markup % Formula
26. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Late Markdowns
Cumulative Markup
Markdown Cancellations
Off-Price Markdowns
27. 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
Pricing Strategies: Price Lining
Selling Price Formula
Expense Ratio
28. The retailers financial condition at a specific point in time
Balance Sheet
Pricing Errors
Markdown optimization
Markdown Optimization
29. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Off-Price Markdown Percentage Formula
Pricing Strategies
Profit and Loss Statement (P&L Statement)
LIFO (last in - first out)
30. Sales less cost of goods sold
Markdown
Gross Margin
Pricing Strategies: Price Lining
Markdown Cancellations
31. 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.
Financial Leverage Ratio Formula
Accounts Receivable (AR)
Markdown Optimization
Depreciation
32. One that is just enough to move the goods
Markup % of Retail Formula
Ideal Markdown
Pricing Strategies
Cumulative Markup % Formula
33. Liabilities+ Owner's equity or net worth
Turnover Rate Formula
Return on Net Worth (RONW) Formula
Assets Formula
Pricing Strategies
34. The prices from lowest to highest that are carried within a merchandise category
Dollar Markdown Formula
Cash Flow Formula
Clearance Markdowns
Pricing Strategies: Price Ranges
35. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Profit Margin
Inventory
Markup % of Retail Formula
36. Evaluates the managament of capital
FIFO (First in - First out)
Markup % of Retail Formula
Return on Sales
Forced Obsolescence
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.
Promotional Markdown
Planned Initial Markup % Formula
Markdown Percentage Formula
Initial Markup (IMU)
38. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
The Cost Method
Net Sales
Cost Complement Formula
Off-Price Markdown Percentage Formula
39. Price Lining - price zones - price ranges
Profit and Loss Statement (P&L Statement)
Net Sales
Pricing Strategies
Assets
40. Total Assets/ Net Worth
Depreciation
Financial Leverage Ratio Formula
Cumulative Markup % Formula
Original Price
41. 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
Markup
Current Ratio
Cost Complement Formula
FIFO (First in - First out)
42. 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
Promotion Errors
Markup % of Retail Formula
Price Sensitivity
Late Markdowns
43. 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.
Assets Formula
Acid test or Quick Ratio
Profit and Loss Statement (P&L Statement)
Original Price
44. Usually lower than original - but held for longer period
Regular Price
Profit Margin Analysis Formula
Cash Flow Formula
Fixed Assets
45. Net Profit/ Net Sales
Profit Margin Analysis Formula
Financial Leverage Ratio Formula
Return on Assets (ROA) Formul
Late Markdowns
46. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Buying Errors
Retail Inventory Method
Acid Test or Quick Ratio (QR) Formula
Cost of Goods Sold (COGS) Formula
47. Revenues received by a retailer
Net Sales
Profit Margin Analysis Formula
Current Liabilities
Profit Margin
48. 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.
Clearance Markdowns
Late Markdowns
Gross Margin Return on Inventory Investment-GMROI Formula
Markdown Percentage Formula
49. 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
Net Profit
Expense Ratio
Pricing Depends on 2 factors
50. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Loss-Leader
Net Profit
Pricing Strategies: Price Ranges
Off-Price Markdowns