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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. 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
Pricing Strategies: Price Lining
Pricing Strategies: Price Zones
5 Steps of Retail Inventory Method
Markup % of Retail Formula
2. Sales for the period/ average inventory
Cost of Goods Sold
Liabilities
Turnover Rate Formula
Return on Assets
3. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Acid Test or Quick Ratio (QR) Formula
Loss-Leader
Liabilities
4. Sales less cost of goods sold
Gross Margin
Assets Formula
Markdown Optimization
Planned Initial Markup % Formula
5. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Cash Flow Formula
Return on Net Worth
Pricing Strategies: Price Zones
Cost of Goods Sold
6. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Return on Sales
Markdown optimization
Initial Markup (IMU)
Pricing Strategies: Price Lining
7. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Profit Margin
Cost Complement Formula
Retail Inventory Method
Expense Ratio Formula
8. Dollar markup ($)/ retail price ($)
Debt Equity Ratio Formula
Markup % of Retail Formula
Operating Expenses
Expense Ratio Formula
9. 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.
Cost of Goods Sold (COGS) Formula
Expense Ratio Formula
Acid test or Quick Ratio
Pricing Strategies: Price Zones
10. Can be transformed simply and rapidly into cash
Current Assets
Loss-Leader
Pricing Strategies
Cost Complement Formula
11. Promotional markdown that involves selling at or near cost for promotional purposes
Retail Inventory Method
Selling Price Formula
Loss-Leader
Debt Equity Ratio
12. 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.
Assets Formula
Cumulative Markup
Markup
Markdown Cancellations
13. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
FIFO (First in - First out)
Balance Sheet
Ideal Markdown
14. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Return on Assets
Promotional Markdown
Assets Formula
Gross Margin Return on Inventory Investment-GMROI Formula
15. The retailers financial condition at a specific point in time
Liabilities
Balance Sheet
Retail Inventory Method
Return on Net Worth
16. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Current Liabilities
Pricing Errors
Current Ratio (CR) Formula
17. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Cost Complement Formula
Depreciation
Assets
Cumulative Markup
18. Price reduction for merchandise that has not lived up to buyers' expectations. Includes broken assortments of merchandise - merchandise lines that buyers no longer want to carry - shopworn goods - items that haven't sold because of an event beyond bu
Clearance Markdowns
Initial Markup (IMU)
Current Assets
Late Markdowns
19. Cash Received by the retailer-cash leaving the retailer
Pricing Strategies
Liabilities
Cash Flow Formula
Retail Inventory Method
20. Evaluates the managament of capital
Return on Sales
Cost of Goods Sold
Cost Complement Formula
Price Sensitivity
21. Liabilities+ Owner's equity or net worth
Promotional Markdown
The Cost Method
Assets Formula
Markup % of Cost Formula
22. The energizing force that fuels and sustains our economic system
Pricing Depends on 2 factors
Profit
Profit Margin Analysis Formula
Cash Flow Formula
23. Ranges of prices that appeals for a particular group of consumers
New Price
Expense Ratio
FIFO (First in - First out)
Pricing Strategies: Price Zones
24. The number of items remaining in stock x dollar markdown
FIFO (First in - First out)
Markdown Cancellation ($) Formula
Acid test or Quick Ratio
Pricing Strategies: Price Lining
25. Short time - like 1 or 2 day sales
Expense Ratio
Temporary Price Reduction
Depreciation
Cumulative Markup
26. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
FIFO (First in - First out)
Current Liabilities
Net Profit
Return on Assets
27. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Expense Ratio
Ideal Markdown
Net Profit
Original Price
28. 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
Profit and Loss Statement (P&L Statement)
Current Ratio
Adage of Profitability for Retailers
Markdown Cancellations
29. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
FIFO (First in - First out)
Financial Leverage Ratio Formula
Net Profit
30. Net Profit After Taxes/ Total Assets
Fixed Assets
Temporary Price Reduction
Financial Leverage Ratio Formula
Return on Assets (ROA) Formul
31. Costs involved in running the business
Debt Equity Ratio Formula
Pricing Depends on 2 factors
Operating Expenses
Acid test or Quick Ratio
32. 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.
Regular Price
Turnover Rate Formula
Expense Ratio
Markdown Percentage
33. 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)
Financial Leverage Ratio Formula
Markdown optimization
Promotion Errors
34. First price or Manufacturers suggestet Retal Price (MSRP)
Gross Margin Return on Inventory Investment-GMROI Formula
Original Price
Buying Errors
Profit and Loss Statement (P&L Statement)
35. 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.
Clearance Markdowns
Inventory
5 Steps of Retail Inventory Method
Return on Assets (ROA) Formul
36. 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.
Pricing Strategies: Price Zones
Liabilities
Financial Leverage Ratio
Accounts Receivable (AR)
37. Total Expenses/ Net Sales
Expense Ratio Formula
Profit Margin Analysis Formula
Fixed Liabilities
Markdown Percentage Formula
38. (gross margin % x Turnover) / (100%-markup %)
Profit Margin
Forced Obsolescence
Gross Margin Return on Inventory Investment-GMROI Formula
Cumulative Markup % Formula
39. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Profit and Loss Statement (P&L Statement)
Return on Assets (ROA) Formul
Markup % of Cost Formula
40. Having the right merchandise - at the right time - for the right price - in the right place
Adage of Profitability for Retailers
Gross Margin
Expense Ratio Formula
Markdown
41. Original Retail price- markdown selling price
Sell-Through Rate
Cumulative Markup % Formula
Temporary Price Reduction
Dollar Markdown Formula
42. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Fixed Liabilities
Markdown Cancellations
The Cost Method
Original Price
43. Net Profit After Taxes/ Net Worth
Acid Test or Quick Ratio (QR) Formula
Financial Leverage Ratio
Return on Net Worth (RONW) Formula
Assets
44. 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
Sell-Through Rate
Profit Margin
Cost Complement Formula
Early Markdowns
45. Cost Price/ (100%-markup %)
Retail Price Formula
Pricing Strategies
Financial Leverage Ratio
Regular Price
46. Net Profit/ Net Sales
Net Sales
Return on Sales
Profit Margin Analysis Formula
Off-Price Markdowns
47. Current Liabilites/ Net Worth
Pricing Strategies: Price Zones
Return on Net Worth (RONW) Formula
Debt Equity Ratio Formula
Markdown
48. One that is just enough to move the goods
Markdown Percentage Formula
Accounts Receivable (AR)
Ideal Markdown
Debt Equity Ratio Formula
49. Current Assets/ Current Liabilities
Markup % of Cost Formula
Retail Inventory Method
Current Ratio (CR) Formula
New Price
50. (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%
The Cost Method
Cost Complement Formula
Planned Initial Markup % Formula
Profit Margin