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Retail Financials
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
LIFO (last in - first out)
The Cost Method
Acid Test or Quick Ratio (QR) Formula
2. 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
Return on Assets (ROA) Formul
Price Sensitivity
Markdown
3. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Retail Inventory Method
Markup % of Retail Formula
GMROII (Gross Margin Return on Inventory Investment)
Profit Margin Analysis Formula
4. Net dollar markdown/ net dollar selling price
Pricing Strategies: Price Ranges
Markup % of Retail Formula
Pricing Depends on 2 factors
Markdown Percentage Formula
5. 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.
Markup % of Retail Formula
Pricing Strategies: Price Zones
Inventory
The Cost Method
6. Priced too high initially - priced too low - selling price of competitors
Inventory
Pricing Errors
Acid test or Quick Ratio
Pricing Strategies: Price Lining
7. Short time - like 1 or 2 day sales
Profit
Cumulative Markup % Formula
Temporary Price Reduction
Operating Expenses
8. First price or Manufacturers suggestet Retal Price (MSRP)
Pricing Strategies: Price Lining
Forced Obsolescence
Original Price
Current Ratio
9. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cumulative Markup
Regular Price
Markdown Percentage Formula
Cost of Goods Sold (COGS) Formula
10. Total Markup on all goods on hand/ retail price of all goods on hand
Dollar Markdown Formula
Markup % of Retail Formula
Cumulative Markup % Formula
Return on Assets (ROA) Formul
11. Cost Price/ (100%-markup %)
Retail Price Formula
Expense Ratio
Off-Price Markdowns
Sell-Through Rate
12. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Pricing Strategies: Price Lining
Liabilities
Planned Initial Markup % Formula
Cost Complement Formula
13. The cost of merchandise that was sold (including the method that was used to determine cost)
Cost of Goods Sold
Markup % of Cost Formula
Gross Margin
Net Sales
14. Based on a calculation commonly represented as a percentage - comparing the amount of inventory a retailer receives from a manufacturer or supplier against what is actually sold to the consumer
Markup % of Retail Formula
Sell-Through Rate
Return on Assets (ROA) Formul
Turnover Rate Formula
15. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Pricing Depends on 2 factors
Fixed Liabilities
Temporary Price Reduction
GMROII (Gross Margin Return on Inventory Investment)
16. The number of items remaining in stock x dollar markdown
Clearance Markdowns
Cumulative Markup
Markdown Cancellation ($) Formula
Sell-Through Rate
17. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Liabilities
Pricing Strategies: Price Ranges
Net Profit
The Cost Method
18. 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
Profit
Fixed Assets
Early Markdowns
Price Sensitivity
19. Liabilities+ Owner's equity or net worth
Profit and Loss Statement (P&L Statement)
Assets Formula
Gross Margin
5 Steps of Retail Inventory Method
20. Price Lining - price zones - price ranges
Liabilities
Profit Margin Analysis Formula
Pricing Strategies
Current Ratio (CR) Formula
21. The retailers financial condition at a specific point in time
Balance Sheet
Off-Price Markdowns
Buying Errors
Off-Price Markdown Percentage Formula
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
Return on Net Worth
Profit and Loss Statement (P&L Statement)
Expense Ratio Formula
Markup
23. 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)
Early Markdowns
Late Markdowns
Adage of Profitability for Retailers
24. 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
Profit and Loss Statement (P&L Statement)
Current Ratio
The Cost Method
GMROII (Gross Margin Return on Inventory Investment)
25. 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
Promotional Markdown
Markdown optimization
5 Steps of Retail Inventory Method
26. 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.
Debt Equity Ratio
Gross Margin Return on Inventory Investment-GMROI Formula
Inventory
Accounts Receivable (AR)
27. 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.
Expense Ratio Formula
Ideal Markdown
Expense Ratio
Financial Leverage Ratio
28. Current Liabilites/ Net Worth
Balance Sheet
Debt Equity Ratio Formula
Planned Initial Markup % Formula
Promotion Errors
29. 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.
Gross Margin
Assets Formula
Markup % of Cost Formula
Acid test or Quick Ratio
30. 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
Profit and Loss Statement (P&L Statement)
Gross Margin
Fixed Assets
LIFO (last in - first out)
31. 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
Liabilities
Selling Price Formula
Turnover Rate Formula
Debt Equity Ratio
32. Usually lower than original - but held for longer period
Initial Markup (IMU)
Regular Price
Markdown optimization
Net Sales
33. (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%
Net Sales
Planned Initial Markup % Formula
Temporary Price Reduction
Cost of Goods Sold
34. 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
FIFO (First in - First out)
Current Ratio
Retail Price Formula
Promotional Markdown
35. Revenues received by a retailer
Accounts Receivable (AR)
Net Sales
Inventory
Retail Inventory Method
36. Ranges of prices that appeals for a particular group of consumers
Assets Formula
Pricing Strategies: Price Zones
Markdown Optimization
Forced Obsolescence
37. 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
The Cost Method
Late Markdowns
Markdown Cancellation ($) Formula
38. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Net Profit
Acid Test or Quick Ratio (QR) Formula
Markdown Cancellations
Return on Assets
39. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Profit Margin
Planned Initial Markup % Formula
Expense Ratio
Markdown optimization
40. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Loss-Leader
Pricing Strategies: Price Lining
Expense Ratio
Cumulative Markup % Formula
41. Can be transformed simply and rapidly into cash
Return on Net Worth
Markdown optimization
Current Assets
Cost of Goods Sold (COGS) Formula
42. 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.
Markup % of Cost Formula
Reasons for taking Markdowns
Promotional Markdown
GMROII (Gross Margin Return on Inventory Investment)
43. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Early Markdowns
Original Price
Pricing Strategies: Price Zones
Markdown Optimization
44. Sales for the period/ average inventory
Turnover Rate Formula
Profit Margin Analysis Formula
Return on Assets
LIFO (last in - first out)
45. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Assets
Markdown
Uncontrollable Errors
New Price
46. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Balance Sheet
Debt Equity Ratio Formula
Adage of Profitability for Retailers
47. 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.
Planned Initial Markup % Formula
Late Markdowns
Dollar Markdown Formula
Loss-Leader
48. 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.
Markup
Gross Margin Return on Inventory Investment-GMROI Formula
Markup % of Retail Formula
Markdown Cancellation ($) Formula
49. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Markdown Optimization
Return on Assets
Return on Net Worth
Current Ratio (CR) Formula
50. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Accounts Receivable (AR)
Forced Obsolescence
Buying Errors
Pricing Strategies
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