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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. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Return on Net Worth (RONW) Formula
Markdown optimization
Dollar Markdown Formula
Profit and Loss Statement (P&L Statement)
2. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Temporary Price Reduction
Operating Expenses
Return on Net Worth
3. Cash Received by the retailer-cash leaving the retailer
Markdown optimization
Cash Flow Formula
Original Price
Assets Formula
4. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Gross Margin Return on Inventory Investment-GMROI Formula
Markdown Cancellation ($) Formula
Retail Inventory Method
Markup
5. In Cost Method. Merchandise sold during a time period is assumed to be sold in the order the merchandise was received. Merchandise on hand for the longest period of time is sold first. Therefore - the ending inventory reflects the items in stock for
Turnover Rate Formula
Markdown Percentage
FIFO (First in - First out)
Ideal Markdown
6. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Accounts Receivable (AR)
Retail Price Formula
Off-Price Markdowns
7. (Cash + Accounts Receivable) / Current Liabilities
Profit Margin Analysis Formula
Acid Test or Quick Ratio (QR) Formula
Pricing Depends on 2 factors
Ideal Markdown
8. Costs involved in running the business
Selling Price Formula
Current Ratio (CR) Formula
Operating Expenses
Pricing Depends on 2 factors
9. Current Liabilites/ Net Worth
Regular Price
Financial Leverage Ratio
Inventory
Debt Equity Ratio Formula
10. Amount of markdown usually less - take the loss early will be easier - strengthen goodwill - replenish stock in lower price lines - leads to higher stock turnover - higher likelihood merchandise will sell in a timely manner
Profit and Loss Statement (P&L Statement)
Price Sensitivity
Early Markdowns
GMROII (Gross Margin Return on Inventory Investment)
11. The number of items remaining in stock x dollar markdown
Off-Price Markdown Percentage Formula
Markdown Cancellation ($) Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Acid Test or Quick Ratio (QR) Formula
12. 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
Late Markdowns
LIFO (last in - first out)
Cost of Goods Sold
Profit Margin
13. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
Operating Expenses
Debt Equity Ratio
Pricing Strategies: Price Ranges
14. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Net Sales
Profit
Assets
Return on Net Worth
15. 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
Pricing Errors
Price Sensitivity
GMROII (Gross Margin Return on Inventory Investment)
Planned Initial Markup % Formula
16. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Initial Markup (IMU)
Liabilities
Original Price
Markup
17. Total Assets/ Net Worth
Fixed Liabilities
Assets
Off-Price Markdowns
Financial Leverage Ratio Formula
18. Cost Price/ (100%-markup %)
Fixed Assets
Off-Price Markdown Percentage Formula
Retail Price Formula
Loss-Leader
19. 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 Lining
Profit and Loss Statement (P&L Statement)
Gross Margin Return on Inventory Investment-GMROI Formula
Price Sensitivity
20. 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
Adage of Profitability for Retailers
Pricing Errors
Gross Margin
21. 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
Return on Assets (ROA) Formul
Current Liabilities
Current Ratio
Off-Price Markdown Percentage Formula
22. 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.
5 Steps of Retail Inventory Method
Accounts Receivable (AR)
Cost of Goods Sold (COGS) Formula
Acid Test or Quick Ratio (QR) Formula
23. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Turnover Rate Formula
Acid test or Quick Ratio
Cumulative Markup % Formula
24. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Profit
Promotional Markdown
Net Profit
Buying Errors
25. Cost + Markup
Promotion Errors
Acid test or Quick Ratio
Selling Price Formula
Expense Ratio Formula
26. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Depreciation
Return on Assets
Sell-Through Rate
Promotional Markdown
27. 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)
Balance Sheet
Pricing Depends on 2 factors
Original Price
28. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Liabilities
Debt Equity Ratio
LIFO (last in - first out)
Financial Leverage Ratio Formula
29. 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.
Markdown Cancellations
Markup
Reasons for taking Markdowns
Cost of Goods Sold (COGS) Formula
30. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Promotional Markdown
Assets Formula
Pricing Strategies: Price Lining
Off-Price Markdowns
31. Financial debts incurred by a retailer
Promotion Errors
Operating Expenses
Liabilities
Financial Leverage Ratio
32. Liabilities+ Owner's equity or net worth
Assets Formula
5 Steps of Retail Inventory Method
Fixed Liabilities
Return on Assets
33. Net Profit After Taxes/ Net Worth
Return on Sales
Retail Inventory Method
Acid Test or Quick Ratio (QR) Formula
Return on Net Worth (RONW) Formula
34. Sales less cost of goods sold
Uncontrollable Errors
Forced Obsolescence
Gross Margin Return on Inventory Investment-GMROI Formula
Gross Margin
35. 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
Promotion Errors
Markup
Net Sales
LIFO (last in - first out)
36. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Fixed Liabilities
Liabilities
Temporary Price Reduction
Return on Net Worth
37. Current Assets/ Current Liabilities
Profit Margin Analysis Formula
Assets
Markup % of Retail Formula
Current Ratio (CR) Formula
38. The energizing force that fuels and sustains our economic system
Original Price
Clearance Markdowns
Profit
Gross Margin
39. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Original Price
Markdown Cancellations
Pricing Strategies
Assets
40. Usually lower than original - but held for longer period
Early Markdowns
Expense Ratio
Regular Price
5 Steps of Retail Inventory Method
41. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Promotion Errors
Accounts Receivable (AR)
Cash Flow Formula
42. 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
Fixed Liabilities
Profit Margin
Sell-Through Rate
43. Original Retail price- markdown selling price
Pricing Strategies: Price Ranges
LIFO (last in - first out)
Return on Assets
Dollar Markdown Formula
44. Dollar markup ($)/ retail price ($)
New Price
Expense Ratio Formula
Markup % of Retail Formula
5 Steps of Retail Inventory Method
45. Promotional markdown that involves selling at or near cost for promotional purposes
Price Sensitivity
Loss-Leader
Current Ratio (CR) Formula
Current Ratio
46. Priced too high initially - priced too low - selling price of competitors
New Price
Late Markdowns
Pricing Errors
Adage of Profitability for Retailers
47. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Off-Price Markdown Percentage Formula
Markdown Optimization
Promotional Markdown
Assets
48. Price Lining - price zones - price ranges
Late Markdowns
Pricing Strategies
LIFO (last in - first out)
The Cost Method
49. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Ideal Markdown
Adage of Profitability for Retailers
Financial Leverage Ratio
Markdown
50. Short time - like 1 or 2 day sales
Loss-Leader
Markdown optimization
Temporary Price Reduction
Markdown Percentage Formula