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