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Test your basic knowledge |
Retail Financials
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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study here
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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. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Pricing Strategies: Price Lining
Cash Flow Formula
Operating Expenses
2. 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
FIFO (First in - First out)
Assets
Retail Inventory Method
3. The energizing force that fuels and sustains our economic system
Markup % of Retail Formula
Profit
Current Ratio (CR) Formula
Current Liabilities
4. 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
FIFO (First in - First out)
Original Price
Cash Flow Formula
Early Markdowns
5. 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.
Clearance Markdowns
New Price
Accounts Receivable (AR)
Markdown optimization
6. Net dollar markdown/ net dollar selling price
Initial Markup (IMU)
Early Markdowns
Return on Assets
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
Price Sensitivity
Return on Assets
Expense Ratio
LIFO (last in - first out)
8. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Cost of Goods Sold (COGS) Formula
Liabilities
Markdown optimization
Debt Equity Ratio
9. Can be transformed simply and rapidly into cash
Depreciation
Dollar Markdown Formula
Current Assets
Markdown Cancellations
10. 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.
Initial Markup (IMU)
Return on Assets (ROA) Formul
Late Markdowns
Net Sales
11. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Markup
Early Markdowns
Pricing Strategies: Price Lining
Initial Markup (IMU)
12. Priced too high initially - priced too low - selling price of competitors
Liabilities
Pricing Errors
Current Liabilities
Fixed Liabilities
13. Net Profit/ Net Sales
Markup % of Cost Formula
Balance Sheet
Profit Margin Analysis Formula
Gross Margin
14. Current Liabilites/ Net Worth
Return on Net Worth (RONW) Formula
Pricing Depends on 2 factors
Debt Equity Ratio Formula
Cash Flow Formula
15. Liabilities+ Owner's equity or net worth
Assets Formula
Net Sales
Markup % of Retail Formula
Pricing Depends on 2 factors
16. Financial debts incurred by a retailer
Liabilities
Loss-Leader
Balance Sheet
Gross Margin
17. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Financial Leverage Ratio Formula
Regular Price
Markdown Percentage
Acid test or Quick Ratio
18. 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
Expense Ratio Formula
New Price
Temporary Price Reduction
GMROII (Gross Margin Return on Inventory Investment)
19. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Off-Price Markdowns
Return on Assets
Profit and Loss Statement (P&L Statement)
Debt Equity Ratio Formula
20. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Forced Obsolescence
Profit and Loss Statement (P&L Statement)
Return on Sales
21. Costs involved in running the business
Profit
Accounts Receivable (AR)
Operating Expenses
GMROII (Gross Margin Return on Inventory Investment)
22. Revenues received by a retailer
5 Steps of Retail Inventory Method
Net Sales
Markdown Cancellation ($) Formula
Financial Leverage Ratio
23. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Expense Ratio Formula
Financial Leverage Ratio
Sell-Through Rate
Debt Equity Ratio
24. Having the right merchandise - at the right time - for the right price - in the right place
Planned Initial Markup % Formula
Operating Expenses
Regular Price
Adage of Profitability for Retailers
25. Total Markup on all goods on hand/ retail price of all goods on hand
Dollar Markdown Formula
Original Price
Cumulative Markup % Formula
Accounts Receivable (AR)
26. Current Assets/ Current Liabilities
Gross Margin
Pricing Depends on 2 factors
Original Price
Current Ratio (CR) Formula
27. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Temporary Price Reduction
Markdown Cancellations
Debt Equity Ratio
Cost of Goods Sold (COGS) Formula
28. The retailers financial condition at a specific point in time
The Cost Method
Pricing Strategies: Price Lining
Balance Sheet
Late Markdowns
29. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
Current Ratio
Initial Markup (IMU)
New Price
30. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Regular Price
Late Markdowns
Cash Flow Formula
Depreciation
31. Examines the financial health of a retailer - as one of the best indicators of having too much debt in relationship to net worth. Comparres the money that vendors or banks are risking with the money that the retail owners have invested in their opera
Markdown Percentage
Selling Price Formula
Debt Equity Ratio
Markdown Cancellation ($) Formula
32. Price Lining - price zones - price ranges
Pricing Strategies
Price Sensitivity
Retail Price Formula
Expense Ratio Formula
33. Original Retail price- markdown selling price
Selling Price Formula
Dollar Markdown Formula
Original Price
Pricing Strategies
34. 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.
Debt Equity Ratio
Depreciation
Expense Ratio
Early Markdowns
35. 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
Planned Initial Markup % Formula
Debt Equity Ratio Formula
5 Steps of Retail Inventory Method
Liabilities
36. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Sell-Through Rate
Cumulative Markup
The Cost Method
Return on Net Worth (RONW) Formula
37. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Off-Price Markdowns
Promotion Errors
Fixed Liabilities
Return on Net Worth
38. Sales less cost of goods sold
Gross Margin
Markdown
Original Price
Regular Price
39. Net Profit After Taxes/ Total Assets
Dollar Markdown Formula
Profit
Current Ratio
Return on Assets (ROA) Formul
40. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Pricing Strategies: Price Ranges
Balance Sheet
Forced Obsolescence
Financial Leverage Ratio Formula
41. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Pricing Depends on 2 factors
Initial Markup (IMU)
Pricing Strategies: Price Ranges
42. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Return on Assets
Buying Errors
The Cost Method
Retail Price Formula
43. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Cost Complement Formula
New Price
Cumulative Markup
44. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Current Ratio
Clearance Markdowns
Retail Inventory Method
45. Evaluates the managament of capital
Net Profit
Return on Sales
Sell-Through Rate
Pricing Strategies: Price Lining
46. 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
Planned Initial Markup % Formula
GMROII (Gross Margin Return on Inventory Investment)
47. Usually lower than original - but held for longer period
Markdown
5 Steps of Retail Inventory Method
Regular Price
Pricing Errors
48. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Profit Margin
Financial Leverage Ratio Formula
LIFO (last in - first out)
49. Cost + Markup
Liabilities
Balance Sheet
Selling Price Formula
Current Ratio
50. Total Expenses/ Net Sales
Accounts Receivable (AR)
Fixed Liabilities
Planned Initial Markup % Formula
Expense Ratio Formula
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