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Retail Financials
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
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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. 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
Debt Equity Ratio
Planned Initial Markup % Formula
Cost of Goods Sold
FIFO (First in - First out)
2. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Markdown Cancellations
Pricing Errors
Net Profit
Debt Equity Ratio Formula
3. Cost Price/ (100%-markup %)
Pricing Strategies
Planned Initial Markup % Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Retail Price Formula
4. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Promotional Markdown
Cost of Goods Sold (COGS) Formula
Markdown Optimization
Retail Inventory Method
5. 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.
Late Markdowns
Return on Assets
The Cost Method
Acid test or Quick Ratio
6. 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
Off-Price Markdown Percentage Formula
Early Markdowns
LIFO (last in - first out)
7. Can be transformed simply and rapidly into cash
Current Assets
Markup % of Cost Formula
Expense Ratio Formula
Cost of Goods Sold
8. Promotional markdown that involves selling at or near cost for promotional purposes
Off-Price Markdown Percentage Formula
Cumulative Markup
Markdown
Loss-Leader
9. Revenues received by a retailer
Financial Leverage Ratio
Pricing Strategies
Net Sales
FIFO (First in - First out)
10. The cost of merchandise that was sold (including the method that was used to determine cost)
FIFO (First in - First out)
Cost of Goods Sold
Selling Price Formula
Inventory
11. Having the right merchandise - at the right time - for the right price - in the right place
Expense Ratio
Adage of Profitability for Retailers
Accounts Receivable (AR)
Return on Assets (ROA) Formul
12. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Planned Initial Markup % Formula
Cost Complement Formula
Return on Sales
Ideal Markdown
13. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Off-Price Markdowns
Net Sales
Debt Equity Ratio
14. Total Expenses/ Net Sales
Temporary Price Reduction
Depreciation
Debt Equity Ratio Formula
Expense Ratio Formula
15. Price is changed (up or down)
Fixed Liabilities
Return on Assets
New Price
Balance Sheet
16. 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
Markdown Percentage Formula
Turnover Rate Formula
GMROII (Gross Margin Return on Inventory Investment)
Current Ratio (CR) Formula
17. Original Retail price- markdown selling price
Return on Assets (ROA) Formul
Cumulative Markup
Depreciation
Dollar Markdown Formula
18. 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
Off-Price Markdown Percentage Formula
5 Steps of Retail Inventory Method
Current Liabilities
Return on Net Worth
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.
Regular Price
Pricing Strategies: Price Ranges
Expense Ratio
Profit Margin
20. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
5 Steps of Retail Inventory Method
FIFO (First in - First out)
Reasons for taking Markdowns
Markdown Cancellations
21. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Operating Expenses
Liabilities
LIFO (last in - first out)
22. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Cash Flow Formula
Price Sensitivity
Expense Ratio
23. Evaluates the managament of capital
Return on Sales
Dollar Markdown Formula
Current Liabilities
Pricing Errors
24. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Assets
Cost of Goods Sold (COGS) Formula
Price Sensitivity
25. Sales less cost of goods sold
Markdown optimization
Gross Margin
Debt Equity Ratio Formula
Promotion Errors
26. 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
Pricing Errors
Markup
Cash Flow Formula
Profit Margin
27. Short time - like 1 or 2 day sales
Profit Margin
GMROII (Gross Margin Return on Inventory Investment)
Temporary Price Reduction
Buying Errors
28. 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.
Accounts Receivable (AR)
Markdown Percentage Formula
Cost of Goods Sold (COGS) Formula
Markup
29. (Cash + Accounts Receivable) / Current Liabilities
Profit Margin Analysis Formula
Acid Test or Quick Ratio (QR) Formula
Return on Assets (ROA) Formul
Return on Assets
30. Net Profit/ Net Sales
Net Profit
Profit Margin Analysis Formula
Retail Price Formula
FIFO (First in - First out)
31. 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
Markdown Percentage Formula
Clearance Markdowns
Current Ratio
Dollar Markdown Formula
32. Cost + Markup
Selling Price Formula
Turnover Rate Formula
Operating Expenses
Inventory
33. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Return on Assets (ROA) Formul
Pricing Strategies: Price Ranges
Off-Price Markdowns
Financial Leverage Ratio Formula
34. The awareness of the consumer to what they perceive to be the window of cost within which they will buy a particular product or service
Original Price
Pricing Depends on 2 factors
Ideal Markdown
Price Sensitivity
35. Ranges of prices that appeals for a particular group of consumers
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Strategies: Price Zones
Assets
Acid test or Quick Ratio
36. 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
Acid Test or Quick Ratio (QR) Formula
Current Assets
Debt Equity Ratio
Cost Complement Formula
37. Cash Received by the retailer-cash leaving the retailer
Accounts Receivable (AR)
Late Markdowns
Cash Flow Formula
Clearance Markdowns
38. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Acid Test or Quick Ratio (QR) Formula
Markdown Percentage Formula
Acid test or Quick Ratio
Markdown optimization
39. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Off-Price Markdown Percentage Formula
Balance Sheet
Forced Obsolescence
Expense Ratio
40. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Promotional Markdown
Profit and Loss Statement (P&L Statement)
Operating Expenses
Loss-Leader
41. 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.
Expense Ratio
Selling Price Formula
Planned Initial Markup % Formula
Promotional Markdown
42. Financial debts incurred by a retailer
Planned Initial Markup % Formula
Liabilities
Return on Assets
Cumulative Markup % Formula
43. 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.
Return on Net Worth
Uncontrollable Errors
Late Markdowns
Depreciation
44. One that is just enough to move the goods
New Price
Ideal Markdown
Current Ratio (CR) Formula
Current Ratio
45. Current Liabilites/ Net Worth
Liabilities
Debt Equity Ratio Formula
Pricing Depends on 2 factors
Return on Sales
46. (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%
GMROII (Gross Margin Return on Inventory Investment)
Planned Initial Markup % Formula
Acid test or Quick Ratio
Cash Flow Formula
47. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Gross Margin
Return on Net Worth
Markdown
Markdown Cancellation ($) Formula
48. Total Markup on all goods on hand/ retail price of all goods on hand
Financial Leverage Ratio
Markup % of Retail Formula
Late Markdowns
Cumulative Markup % Formula
49. Dollar markup ($)/ cost price ($)
Dollar Markdown Formula
Markup % of Cost Formula
Clearance Markdowns
Pricing Errors
50. Improper displays - merchandise returns due to high pressure selling
Dollar Markdown Formula
Retail Inventory Method
Temporary Price Reduction
Promotion Errors
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