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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. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
FIFO (First in - First out)
Initial Markup (IMU)
Markdown Cancellation ($) Formula
Net Profit
2. The energizing force that fuels and sustains our economic system
Fixed Assets
Cost of Goods Sold (COGS) Formula
Return on Assets
Profit
3. Total Markup on all goods on hand/ retail price of all goods on hand
Markdown
Markdown Optimization
Cumulative Markup % Formula
Markdown Percentage Formula
4. Usually lower than original - but held for longer period
Regular Price
5 Steps of Retail Inventory Method
Promotional Markdown
Original Price
5. Buying errors - promotion errors - pricing errors - uncontrollable errors
GMROII (Gross Margin Return on Inventory Investment)
Assets Formula
Reasons for taking Markdowns
Gross Margin
6. 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
Debt Equity Ratio Formula
Current Ratio
Price Sensitivity
New Price
7. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Promotion Errors
Expense Ratio Formula
Markdown Optimization
8. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Return on Assets
Markdown optimization
Selling Price Formula
Turnover Rate Formula
9. Current Assets/ Current Liabilities
Gross Margin Return on Inventory Investment-GMROI Formula
Off-Price Markdown Percentage Formula
Depreciation
Current Ratio (CR) Formula
10. (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%
Expense Ratio Formula
Planned Initial Markup % Formula
Price Sensitivity
Pricing Strategies: Price Ranges
11. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Acid Test or Quick Ratio (QR) Formula
Loss-Leader
Adage of Profitability for Retailers
Pricing Strategies: Price Lining
12. 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.
Assets
Temporary Price Reduction
Current Assets
Inventory
13. 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
Pricing Depends on 2 factors
Off-Price Markdown Percentage Formula
Price Sensitivity
14. 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
FIFO (First in - First out)
Clearance Markdowns
Markdown Cancellation ($) Formula
Accounts Receivable (AR)
15. Financial debts incurred by a retailer
Cost Complement Formula
Liabilities
Profit Margin Analysis Formula
FIFO (First in - First out)
16. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Profit Margin Analysis Formula
Pricing Strategies: Price Ranges
Assets Formula
17. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Fixed Liabilities
Cost of Goods Sold (COGS) Formula
Current Ratio (CR) Formula
New Price
18. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Current Ratio (CR) Formula
Net Profit
5 Steps of Retail Inventory Method
Cost of Goods Sold
19. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Markdown Optimization
Current Assets
Cash Flow Formula
20. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Balance Sheet
Uncontrollable Errors
Promotion Errors
Current Liabilities
21. First price or Manufacturers suggestet Retal Price (MSRP)
Dollar Markdown Formula
Financial Leverage Ratio Formula
Acid test or Quick Ratio
Original Price
22. 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
Reasons for taking Markdowns
Assets Formula
Profit and Loss Statement (P&L Statement)
23. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Pricing Strategies: Price Zones
Markdown Cancellation ($) Formula
Regular Price
Cumulative Markup
24. Evaluates the managament of capital
Markdown Optimization
Original Price
Acid test or Quick Ratio
Return on Sales
25. (Cash + Accounts Receivable) / Current Liabilities
Return on Net Worth
Debt Equity Ratio Formula
Late Markdowns
Acid Test or Quick Ratio (QR) Formula
26. Promotional markdown that involves selling at or near cost for promotional purposes
Financial Leverage Ratio Formula
Cumulative Markup % Formula
Retail Price Formula
Loss-Leader
27. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Pricing Strategies
Cost of Goods Sold (COGS) Formula
Inventory
28. 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.
Markdown Percentage
Late Markdowns
Markdown Optimization
Off-Price Markdown Percentage Formula
29. 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
Return on Assets
Debt Equity Ratio Formula
Cost of Goods Sold
30. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Debt Equity Ratio
Reasons for taking Markdowns
Forced Obsolescence
The Cost Method
31. 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.
Initial Markup (IMU)
Return on Net Worth (RONW) Formula
Acid test or Quick Ratio
Current Ratio
32. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Late Markdowns
Inventory
Fixed Assets
Initial Markup (IMU)
33. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Inventory
Retail Inventory Method
Financial Leverage Ratio
Acid test or Quick Ratio
34. (gross margin % x Turnover) / (100%-markup %)
Sell-Through Rate
Off-Price Markdown Percentage Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Markup % of Cost Formula
35. Net Profit/ Net Sales
Markup % of Retail Formula
Profit Margin Analysis Formula
5 Steps of Retail Inventory Method
Gross Margin Return on Inventory Investment-GMROI Formula
36. Costs involved in running the business
Dollar Markdown Formula
Acid Test or Quick Ratio (QR) Formula
Operating Expenses
GMROII (Gross Margin Return on Inventory Investment)
37. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Accounts Receivable (AR)
Loss-Leader
Markdown
Debt Equity Ratio
38. The number of items remaining in stock x dollar markdown
Markdown Percentage
Markdown Cancellation ($) Formula
Ideal Markdown
Cumulative Markup
39. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Optimization
Markdown Cancellations
Off-Price Markdown Percentage Formula
Markdown Percentage
40. 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)
Markdown Cancellations
5 Steps of Retail Inventory Method
Profit Margin Analysis Formula
41. Revenues received by a retailer
Net Sales
Balance Sheet
Expense Ratio
Promotional Markdown
42. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Retail Inventory Method
Off-Price Markdowns
Current Assets
Expense Ratio Formula
43. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Debt Equity Ratio Formula
Depreciation
Cost of Goods Sold
44. 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
Current Ratio
5 Steps of Retail Inventory Method
Debt Equity Ratio
Debt Equity Ratio Formula
45. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Markup
Debt Equity Ratio Formula
Net Profit
46. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Errors
Pricing Depends on 2 factors
Accounts Receivable (AR)
Markdown Cancellation ($) Formula
47. Short time - like 1 or 2 day sales
Markdown Cancellations
Cost of Goods Sold
Reasons for taking Markdowns
Temporary Price Reduction
48. Having the right merchandise - at the right time - for the right price - in the right place
Adage of Profitability for Retailers
Clearance Markdowns
Return on Sales
Return on Assets
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
Off-Price Markdowns
Markdown optimization
Pricing Errors
Cost of Goods Sold
50. Cost + Markup
Promotion Errors
Net Profit
The Cost Method
Selling Price Formula