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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. Buying errors - promotion errors - pricing errors - uncontrollable errors
Debt Equity Ratio
Profit Margin Analysis Formula
New Price
Reasons for taking Markdowns
2. Total Expenses/ Net Sales
Expense Ratio Formula
Cost of Goods Sold (COGS) Formula
Pricing Strategies: Price Ranges
Return on Assets
3. 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
Off-Price Markdowns
Profit Margin
LIFO (last in - first out)
5 Steps of Retail Inventory Method
4. 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
Early Markdowns
Return on Assets
Cost of Goods Sold
LIFO (last in - first out)
5. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Uncontrollable Errors
Pricing Depends on 2 factors
Markdown optimization
Cumulative Markup % Formula
6. Sales for the period/ average inventory
Turnover Rate Formula
Expense Ratio Formula
Retail Inventory Method
Regular Price
7. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Profit
Return on Net Worth
Depreciation
8. Ranges of prices that appeals for a particular group of consumers
The Cost Method
Cumulative Markup
Pricing Strategies: Price Zones
Gross Margin
9. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Cumulative Markup
Markdown Optimization
Sell-Through Rate
Return on Net Worth
10. Dollar markup ($)/ retail price ($)
Markdown
Profit
Markup % of Retail Formula
Turnover Rate Formula
11. Total Markup on all goods on hand/ retail price of all goods on hand
Assets
Cumulative Markup % Formula
Profit Margin Analysis Formula
Early Markdowns
12. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Liabilities
Profit Margin
Adage of Profitability for Retailers
Reasons for taking Markdowns
13. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold (COGS) Formula
Markdown
Markup
Loss-Leader
14. Dollar markup ($)/ cost price ($)
Price Sensitivity
Markup % of Cost Formula
Return on Sales
Current Ratio (CR) Formula
15. 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
Retail Inventory Method
Sell-Through Rate
Inventory
Markdown
16. Original Retail price- markdown selling price
Acid Test or Quick Ratio (QR) Formula
Fixed Liabilities
Dollar Markdown Formula
5 Steps of Retail Inventory Method
17. The prices from lowest to highest that are carried within a merchandise category
Expense Ratio Formula
Pricing Strategies: Price Ranges
Current Ratio (CR) Formula
Inventory
18. The number of items remaining in stock x dollar markdown
Cumulative Markup % Formula
FIFO (First in - First out)
Markdown Cancellation ($) Formula
Pricing Strategies: Price Ranges
19. 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.
Original Price
Markup % of Retail Formula
Debt Equity Ratio
Expense Ratio
20. 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
GMROII (Gross Margin Return on Inventory Investment)
The Cost Method
Early Markdowns
Net Profit
21. First price or Manufacturers suggestet Retal Price (MSRP)
Financial Leverage Ratio Formula
5 Steps of Retail Inventory Method
Original Price
Fixed Assets
22. Can be transformed simply and rapidly into cash
Markdown optimization
Selling Price Formula
Current Assets
Ideal Markdown
23. 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.
Debt Equity Ratio
Clearance Markdowns
Late Markdowns
Assets Formula
24. 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
Fixed Assets
Gross Margin
Financial Leverage Ratio
25. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Regular Price
Initial Markup (IMU)
Late Markdowns
26. Promotional markdown that involves selling at or near cost for promotional purposes
Financial Leverage Ratio Formula
Inventory
Loss-Leader
Acid test or Quick Ratio
27. (Cash + Accounts Receivable) / Current Liabilities
Buying Errors
Acid Test or Quick Ratio (QR) Formula
Ideal Markdown
Markdown Cancellation ($) Formula
28. Price Lining - price zones - price ranges
Pricing Strategies
Current Ratio
5 Steps of Retail Inventory Method
Current Liabilities
29. The weather - merchandise is shopworn - economic downturn
Return on Assets
Pricing Strategies: Price Zones
Uncontrollable Errors
Financial Leverage Ratio
30. Total Assets/ Net Worth
Markup % of Cost Formula
Financial Leverage Ratio Formula
Promotion Errors
Markdown Cancellations
31. Sales less cost of goods sold
Reasons for taking Markdowns
Net Sales
Current Assets
Gross Margin
32. Cost Price/ (100%-markup %)
The Cost Method
Retail Price Formula
Pricing Strategies: Price Ranges
5 Steps of Retail Inventory Method
33. Price is changed (up or down)
Debt Equity Ratio Formula
New Price
Regular Price
Return on Net Worth
34. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Promotional Markdown
Pricing Strategies: Price Lining
Uncontrollable Errors
The Cost Method
35. Net Profit/ Net Sales
Cost of Goods Sold (COGS) Formula
Fixed Assets
Markdown Percentage
Profit Margin Analysis Formula
36. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Fixed Liabilities
Markdown Percentage Formula
Late Markdowns
Promotion Errors
37. Revenues received by a retailer
Retail Inventory Method
Net Sales
Markdown Percentage Formula
Accounts Receivable (AR)
38. Net dollar markdown/ net dollar selling price
Current Assets
Markdown Percentage Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Financial Leverage Ratio
39. Priced too high initially - priced too low - selling price of competitors
Early Markdowns
Debt Equity Ratio
Pricing Errors
Assets Formula
40. Current Liabilites/ Net Worth
Regular Price
Profit
Initial Markup (IMU)
Debt Equity Ratio Formula
41. (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%
Planned Initial Markup % Formula
Liabilities
Assets Formula
Profit Margin
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
Markdown optimization
Expense Ratio
Buying Errors
Markdown
43. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Balance Sheet
Fixed Liabilities
Forced Obsolescence
Retail Inventory Method
44. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Acid Test or Quick Ratio (QR) Formula
Markup % of Cost Formula
Return on Assets
Profit and Loss Statement (P&L Statement)
45. Usually lower than original - but held for longer period
Regular Price
Cash Flow Formula
Debt Equity Ratio
Cost of Goods Sold (COGS) Formula
46. The retailers financial condition at a specific point in time
Return on Net Worth (RONW) Formula
Fixed Assets
Balance Sheet
Acid test or Quick Ratio
47. 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.
Ideal Markdown
Promotional Markdown
Debt Equity Ratio
Return on Net Worth (RONW) Formula
48. 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.
Temporary Price Reduction
Gross Margin Return on Inventory Investment-GMROI Formula
Depreciation
Inventory
49. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Loss-Leader
Acid Test or Quick Ratio (QR) Formula
Regular Price
50. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
LIFO (last in - first out)
Markdown Percentage
Selling Price Formula
Profit Margin Analysis Formula