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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. 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
Pricing Depends on 2 factors
Expense Ratio
Return on Assets (ROA) Formul
Sell-Through Rate
2. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Profit Margin Analysis Formula
Financial Leverage Ratio
Markup % of Retail Formula
FIFO (First in - First out)
3. Priced too high initially - priced too low - selling price of competitors
Current Ratio
Buying Errors
Financial Leverage Ratio Formula
Pricing Errors
4. The energizing force that fuels and sustains our economic system
The Cost Method
Assets
Fixed Liabilities
Profit
5. Total Assets/ Net Worth
Accounts Receivable (AR)
Markdown optimization
Financial Leverage Ratio Formula
Assets Formula
6. 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.
Buying Errors
Accounts Receivable (AR)
Fixed Liabilities
Markdown Percentage Formula
7. 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
Pricing Strategies: Price Ranges
Price Sensitivity
Pricing Strategies: Price Zones
Return on Net Worth
8. Merchandise Available for sale at cost/ Merchandise available for sale at retail
FIFO (First in - First out)
Cost Complement Formula
Markdown Cancellation ($) Formula
Fixed Liabilities
9. First price or Manufacturers suggestet Retal Price (MSRP)
New Price
Original Price
Financial Leverage Ratio Formula
Acid Test or Quick Ratio (QR) Formula
10. Financial debts incurred by a retailer
Temporary Price Reduction
Debt Equity Ratio Formula
Liabilities
Promotional Markdown
11. Sales less cost of goods sold
Reasons for taking Markdowns
Retail Price Formula
Gross Margin
Expense Ratio
12. Total Expenses/ Net Sales
Expense Ratio Formula
Promotion Errors
Selling Price Formula
Acid Test or Quick Ratio (QR) Formula
13. Sales for the period/ average inventory
Pricing Strategies: Price Lining
Turnover Rate Formula
Cash Flow Formula
Markup % of Cost Formula
14. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
FIFO (First in - First out)
Depreciation
Dollar Markdown Formula
Financial Leverage Ratio Formula
15. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Return on Assets (ROA) Formul
Current Liabilities
Net Sales
Acid test or Quick Ratio
16. 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.
Inventory
Cost Complement Formula
Profit Margin Analysis Formula
Price Sensitivity
17. Original Retail price- markdown selling price
LIFO (last in - first out)
Price Sensitivity
Return on Assets (ROA) Formul
Dollar Markdown Formula
18. Price is changed (up or down)
Fixed Liabilities
Profit Margin Analysis Formula
New Price
Markdown Percentage Formula
19. Current Liabilites/ Net Worth
Price Sensitivity
Debt Equity Ratio Formula
Financial Leverage Ratio Formula
Initial Markup (IMU)
20. 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
Early Markdowns
5 Steps of Retail Inventory Method
Buying Errors
21. 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
Acid test or Quick Ratio
Gross Margin Return on Inventory Investment-GMROI Formula
5 Steps of Retail Inventory Method
22. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Markdown Cancellations
Acid Test or Quick Ratio (QR) Formula
Off-Price Markdowns
Assets
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
Reasons for taking Markdowns
GMROII (Gross Margin Return on Inventory Investment)
Temporary Price Reduction
Late Markdowns
24. 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
Late Markdowns
Retail Inventory Method
Original Price
Current Ratio
25. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Fixed Assets
Current Ratio
Profit and Loss Statement (P&L Statement)
26. The weather - merchandise is shopworn - economic downturn
Depreciation
Liabilities
Markdown optimization
Uncontrollable Errors
27. 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.
Regular Price
Acid test or Quick Ratio
Cost of Goods Sold
Markdown Percentage
28. Price Lining - price zones - price ranges
Pricing Strategies
Net Profit
Late Markdowns
Buying Errors
29. Cost + Markup
New Price
Selling Price Formula
Cost Complement Formula
Promotion Errors
30. 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 (RONW) Formula
Profit and Loss Statement (P&L Statement)
Late Markdowns
Accounts Receivable (AR)
31. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Initial Markup (IMU)
Return on Net Worth
Liabilities
32. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Accounts Receivable (AR)
Assets
Pricing Strategies: Price Ranges
Fixed Liabilities
33. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Reasons for taking Markdowns
Current Ratio
Return on Sales
34. (gross margin % x Turnover) / (100%-markup %)
5 Steps of Retail Inventory Method
Off-Price Markdowns
Gross Margin Return on Inventory Investment-GMROI Formula
Cash Flow Formula
35. Usually lower than original - but held for longer period
Liabilities
Price Sensitivity
Debt Equity Ratio
Regular Price
36. Dollar markup ($)/ cost price ($)
Markdown Percentage
Promotional Markdown
Selling Price Formula
Markup % of Cost Formula
37. The number of items remaining in stock x dollar markdown
Balance Sheet
Markdown Cancellation ($) Formula
Buying Errors
Adage of Profitability for Retailers
38. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Markdown Optimization
Profit and Loss Statement (P&L Statement)
Depreciation
39. Evaluates the managament of capital
Return on Sales
Profit
Financial Leverage Ratio
Markdown Cancellation ($) Formula
40. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Profit and Loss Statement (P&L Statement)
Return on Assets (ROA) Formul
Pricing Strategies: Price Ranges
Pricing Errors
41. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Fixed Assets
Markdown Cancellation ($) Formula
Assets
Net Profit
42. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Fixed Assets
Return on Net Worth
Markdown optimization
Cost of Goods Sold (COGS) Formula
43. Ranges of prices that appeals for a particular group of consumers
Dollar Markdown Formula
Acid Test or Quick Ratio (QR) Formula
Retail Price Formula
Pricing Strategies: Price Zones
44. Short time - like 1 or 2 day sales
Pricing Strategies: Price Zones
Selling Price Formula
Retail Price Formula
Temporary Price Reduction
45. One that is just enough to move the goods
Retail Inventory Method
Markup
Ideal Markdown
Net Profit
46. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Pricing Strategies
Buying Errors
Markdown Percentage Formula
47. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Financial Leverage Ratio
Balance Sheet
Original Price
48. Net dollar markdown/ net dollar selling price
Debt Equity Ratio
Markdown Percentage Formula
Reasons for taking Markdowns
Cash Flow Formula
49. What the retailer owns in monetary value
Accounts Receivable (AR)
Assets
Financial Leverage Ratio Formula
Regular Price
50. 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)
5 Steps of Retail Inventory Method
Profit and Loss Statement (P&L Statement)
Markdown Cancellations