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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. Total Expenses/ Net Sales
Current Assets
Acid Test or Quick Ratio (QR) Formula
Loss-Leader
Expense Ratio Formula
2. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Liabilities
Debt Equity Ratio
Fixed Assets
Debt Equity Ratio Formula
3. Total Assets/ Net Worth
Current Ratio
Price Sensitivity
Markup % of Cost Formula
Financial Leverage Ratio Formula
4. Evaluates the managament of capital
Profit Margin Analysis Formula
Liabilities
Return on Sales
Fixed Liabilities
5. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Balance Sheet
Cash Flow Formula
Return on Assets (ROA) Formul
Forced Obsolescence
6. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Acid Test or Quick Ratio (QR) Formula
Net Profit
Original Price
Clearance Markdowns
7. Current Liabilites/ Net Worth
Reasons for taking Markdowns
Selling Price Formula
Debt Equity Ratio Formula
Markdown Percentage Formula
8. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Uncontrollable Errors
Profit and Loss Statement (P&L Statement)
FIFO (First in - First out)
Gross Margin
9. Price Lining - price zones - price ranges
Return on Assets
Pricing Strategies
Acid test or Quick Ratio
Forced Obsolescence
10. The number of items remaining in stock x dollar markdown
Profit Margin
Markdown Cancellation ($) Formula
Ideal Markdown
Markdown Percentage
11. (gross margin % x Turnover) / (100%-markup %)
Selling Price Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Off-Price Markdowns
Acid Test or Quick Ratio (QR) Formula
12. The energizing force that fuels and sustains our economic system
Return on Sales
Profit
Markup % of Cost Formula
Fixed Liabilities
13. The retailers financial condition at a specific point in time
Balance Sheet
Gross Margin
Reasons for taking Markdowns
Early Markdowns
14. Cash Received by the retailer-cash leaving the retailer
Acid test or Quick Ratio
Cash Flow Formula
Profit
Pricing Depends on 2 factors
15. Usually lower than original - but held for longer period
Assets Formula
Regular Price
Cost Complement Formula
FIFO (First in - First out)
16. Financial debts incurred by a retailer
Acid Test or Quick Ratio (QR) Formula
Liabilities
Pricing Errors
Forced Obsolescence
17. Total Markup on all goods on hand/ retail price of all goods on hand
Gross Margin
Cumulative Markup % Formula
Ideal Markdown
Inventory
18. 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.
Promotion Errors
Expense Ratio Formula
Promotional Markdown
Regular Price
19. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Markdown Percentage Formula
Financial Leverage Ratio Formula
Debt Equity Ratio Formula
20. Liabilities+ Owner's equity or net worth
Pricing Strategies: Price Ranges
Current Ratio (CR) Formula
Assets Formula
Markdown Cancellations
21. 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.
Accounts Receivable (AR)
Cost of Goods Sold (COGS) Formula
Markdown
Net Profit
22. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Pricing Strategies: Price Ranges
Return on Net Worth
LIFO (last in - first out)
Expense Ratio
23. 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
Markdown Percentage
Net Sales
Markup % of Retail Formula
24. Dollar markup ($)/ cost price ($)
Dollar Markdown Formula
5 Steps of Retail Inventory Method
Markup % of Cost Formula
Selling Price Formula
25. Costs involved in running the business
Debt Equity Ratio Formula
Acid test or Quick Ratio
Pricing Errors
Operating Expenses
26. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Cost of Goods Sold
Cost Complement Formula
Cumulative Markup % Formula
Return on Assets
27. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Cost Complement Formula
Financial Leverage Ratio Formula
Pricing Depends on 2 factors
Fixed Assets
28. Current Assets/ Current Liabilities
Return on Assets
Initial Markup (IMU)
Original Price
Current Ratio (CR) Formula
29. 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
Loss-Leader
Markdown optimization
Retail Inventory Method
30. Having the right merchandise - at the right time - for the right price - in the right place
Dollar Markdown Formula
Adage of Profitability for Retailers
Profit Margin
Buying Errors
31. 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
Markdown
Initial Markup (IMU)
Turnover Rate Formula
FIFO (First in - First out)
32. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Pricing Strategies: Price Lining
Markdown optimization
Depreciation
33. 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
Acid Test or Quick Ratio (QR) Formula
LIFO (last in - first out)
Markup
Return on Assets
34. (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%
5 Steps of Retail Inventory Method
Planned Initial Markup % Formula
Off-Price Markdown Percentage Formula
Acid test or Quick Ratio
35. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Temporary Price Reduction
Accounts Receivable (AR)
Pricing Strategies: Price Lining
Cost of Goods Sold (COGS) Formula
36. 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
Fixed Assets
New Price
5 Steps of Retail Inventory Method
Late Markdowns
37. Improper displays - merchandise returns due to high pressure selling
Net Profit
Cost Complement Formula
Debt Equity Ratio Formula
Promotion Errors
38. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Markdown Percentage
Turnover Rate Formula
Return on Net Worth (RONW) Formula
Cost Complement Formula
39. 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
Late Markdowns
The Cost Method
Markdown Percentage Formula
Expense Ratio
40. Short time - like 1 or 2 day sales
Temporary Price Reduction
Return on Net Worth
5 Steps of Retail Inventory Method
Sell-Through Rate
41. 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
Return on Net Worth (RONW) Formula
Markup % of Cost Formula
Planned Initial Markup % Formula
Price Sensitivity
42. 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.
Late Markdowns
Fixed Liabilities
5 Steps of Retail Inventory Method
Financial Leverage Ratio Formula
43. 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
Buying Errors
Profit Margin
Debt Equity Ratio
The Cost Method
44. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Off-Price Markdowns
Markdown Percentage
Regular Price
Markdown Cancellation ($) Formula
45. Buying errors - promotion errors - pricing errors - uncontrollable errors
Profit Margin
Markup % of Cost Formula
Fixed Assets
Reasons for taking Markdowns
46. Can be transformed simply and rapidly into cash
Clearance Markdowns
Current Assets
Assets
Profit and Loss Statement (P&L Statement)
47. The weather - merchandise is shopworn - economic downturn
Markup % of Retail Formula
Markdown Cancellation ($) Formula
Uncontrollable Errors
The Cost Method
48. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Pricing Depends on 2 factors
Loss-Leader
Fixed Liabilities
Planned Initial Markup % Formula
49. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Planned Initial Markup % Formula
Cumulative Markup
Reasons for taking Markdowns
Depreciation
50. The prices from lowest to highest that are carried within a merchandise category
Loss-Leader
Pricing Depends on 2 factors
Profit Margin Analysis Formula
Pricing Strategies: Price Ranges