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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. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Profit
Off-Price Markdown Percentage Formula
Cost of Goods Sold (COGS) Formula
Loss-Leader
2. 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.
Return on Assets (ROA) Formul
Acid test or Quick Ratio
Markdown Percentage Formula
Clearance Markdowns
3. Usually lower than original - but held for longer period
Regular Price
Cost of Goods Sold
Retail Inventory Method
Cumulative Markup % Formula
4. The weather - merchandise is shopworn - economic downturn
Adage of Profitability for Retailers
Fixed Liabilities
Uncontrollable Errors
Balance Sheet
5. Net Profit After Taxes/ Net Worth
Pricing Strategies: Price Ranges
Markdown Percentage
Net Profit
Return on Net Worth (RONW) Formula
6. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Current Ratio (CR) Formula
Pricing Strategies: Price Zones
Buying Errors
Adage of Profitability for Retailers
7. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Retail Price Formula
Buying Errors
Ideal Markdown
8. 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.
Acid test or Quick Ratio
Current Ratio
Profit and Loss Statement (P&L Statement)
Accounts Receivable (AR)
9. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Return on Net Worth
Pricing Depends on 2 factors
Promotion Errors
Markdown Percentage
10. Having the right merchandise - at the right time - for the right price - in the right place
Net Profit
Adage of Profitability for Retailers
Profit Margin Analysis Formula
Retail Inventory Method
11. Original Retail price- markdown selling price
Dollar Markdown Formula
Turnover Rate Formula
Current Ratio (CR) Formula
LIFO (last in - first out)
12. Price Lining - price zones - price ranges
Buying Errors
LIFO (last in - first out)
Pricing Strategies
Markup % of Cost Formula
13. 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
Operating Expenses
Debt Equity Ratio
Assets
Net Sales
14. Costs involved in running the business
Financial Leverage Ratio Formula
Operating Expenses
GMROII (Gross Margin Return on Inventory Investment)
Balance Sheet
15. Cash Received by the retailer-cash leaving the retailer
Current Liabilities
Operating Expenses
Pricing Strategies: Price Zones
Cash Flow Formula
16. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Profit Margin
Markdown Cancellations
Off-Price Markdown Percentage Formula
Adage of Profitability for Retailers
17. Current Assets/ Current Liabilities
Fixed Liabilities
Current Ratio (CR) Formula
Expense Ratio
Financial Leverage Ratio
18. 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
Pricing Errors
Loss-Leader
Current Liabilities
The Cost Method
19. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Accounts Receivable (AR)
Assets
Current Assets
Off-Price Markdowns
20. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Cost of Goods Sold (COGS) Formula
Profit Margin Analysis Formula
Forced Obsolescence
Return on Net Worth (RONW) Formula
21. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Pricing Strategies
New Price
Markdown optimization
22. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Markdown Cancellation ($) Formula
Original Price
Pricing Errors
23. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Return on Assets
Off-Price Markdown Percentage Formula
Pricing Strategies
24. Short time - like 1 or 2 day sales
Fixed Assets
Temporary Price Reduction
Financial Leverage Ratio Formula
Cash Flow Formula
25. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Pricing Strategies: Price Lining
Return on Assets
Regular Price
Fixed Liabilities
26. The energizing force that fuels and sustains our economic system
Return on Sales
Depreciation
Profit
The Cost Method
27. Total Markup on all goods on hand/ retail price of all goods on hand
Retail Inventory Method
Regular Price
Cumulative Markup % Formula
Cumulative Markup
28. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Cumulative Markup
Acid Test or Quick Ratio (QR) Formula
Clearance Markdowns
29. 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
Accounts Receivable (AR)
Markdown Optimization
Temporary Price Reduction
Early Markdowns
30. 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.
Fixed Assets
Markup
Current Assets
Cost Complement Formula
31. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
GMROII (Gross Margin Return on Inventory Investment)
Current Liabilities
Net Profit
Profit Margin
32. Liabilities+ Owner's equity or net worth
Current Liabilities
Adage of Profitability for Retailers
Assets Formula
Temporary Price Reduction
33. The retailers financial condition at a specific point in time
Financial Leverage Ratio Formula
Dollar Markdown Formula
Forced Obsolescence
Balance Sheet
34. Dollar markup ($)/ cost price ($)
FIFO (First in - First out)
Markup
Pricing Strategies: Price Zones
Markup % of Cost Formula
35. Sales less cost of goods sold
Gross Margin
Current Assets
Financial Leverage Ratio Formula
Inventory
36. Cost Price/ (100%-markup %)
Retail Price Formula
GMROII (Gross Margin Return on Inventory Investment)
Markdown Optimization
Cost of Goods Sold (COGS) Formula
37. 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
Current Assets
Assets
Accounts Receivable (AR)
GMROII (Gross Margin Return on Inventory Investment)
38. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Gross Margin Return on Inventory Investment-GMROI Formula
Cash Flow Formula
Cumulative Markup
Pricing Depends on 2 factors
39. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
FIFO (First in - First out)
Retail Inventory Method
Operating Expenses
Financial Leverage Ratio
40. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Cash Flow Formula
Debt Equity Ratio
Liabilities
41. 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
Buying Errors
Forced Obsolescence
Sell-Through Rate
42. 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
Promotion Errors
Late Markdowns
FIFO (First in - First out)
Turnover Rate Formula
43. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
New Price
Return on Sales
Current Liabilities
44. Net dollar markdown/ net dollar selling price
Expense Ratio
Profit Margin Analysis Formula
Pricing Strategies: Price Zones
Markdown Percentage Formula
45. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Current Liabilities
Markdown Optimization
Cost of Goods Sold (COGS) Formula
Planned Initial Markup % Formula
46. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Pricing Strategies
Promotional Markdown
Return on Assets
Cumulative Markup % Formula
47. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Cost of Goods Sold (COGS) Formula
Cost of Goods Sold
Financial Leverage Ratio Formula
48. (gross margin % x Turnover) / (100%-markup %)
Net Profit
Gross Margin Return on Inventory Investment-GMROI Formula
Assets
Markup % of Retail Formula
49. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown
Net Profit
Gross Margin Return on Inventory Investment-GMROI Formula
Price Sensitivity
50. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Early Markdowns
Return on Net Worth
FIFO (First in - First out)
Return on Net Worth (RONW) Formula