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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. 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
Debt Equity Ratio
Assets
Operating Expenses
Reasons for taking Markdowns
2. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Forced Obsolescence
Retail Inventory Method
The Cost Method
Fixed Assets
3. Having the right merchandise - at the right time - for the right price - in the right place
Turnover Rate Formula
Expense Ratio Formula
Selling Price Formula
Adage of Profitability for Retailers
4. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
Retail Price Formula
Inventory
Financial Leverage Ratio Formula
5. 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.
LIFO (last in - first out)
Acid test or Quick Ratio
Return on Net Worth
Liabilities
6. Short time - like 1 or 2 day sales
Profit
Ideal Markdown
Clearance Markdowns
Temporary Price Reduction
7. The prices from lowest to highest that are carried within a merchandise category
Financial Leverage Ratio Formula
Pricing Strategies: Price Ranges
Fixed Assets
Current Liabilities
8. Cost + Markup
Selling Price Formula
Cumulative Markup % Formula
Cost of Goods Sold (COGS) Formula
Markdown Optimization
9. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Markup
Markdown Percentage
Profit Margin Analysis Formula
10. 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
Operating Expenses
Accounts Receivable (AR)
Expense Ratio
11. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Gross Margin
Acid test or Quick Ratio
Markdown Cancellations
Markdown
12. Net Profit/ Net Sales
Cost Complement Formula
Promotion Errors
Loss-Leader
Profit Margin Analysis Formula
13. One that is just enough to move the goods
Price Sensitivity
Debt Equity Ratio
Ideal Markdown
Off-Price Markdown Percentage Formula
14. Cost Price/ (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Retail Price Formula
Return on Net Worth
Pricing Depends on 2 factors
15. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Profit Margin Analysis Formula
Cost Complement Formula
Current Liabilities
Markup % of Cost Formula
16. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Current Liabilities
New Price
Return on Net Worth
Markdown optimization
17. (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%
Cost Complement Formula
Planned Initial Markup % Formula
Buying Errors
Loss-Leader
18. Dollar markup ($)/ cost price ($)
Net Profit
Expense Ratio Formula
Return on Assets
Markup % of Cost Formula
19. Usually lower than original - but held for longer period
Dollar Markdown Formula
Regular Price
Debt Equity Ratio
Markup % of Retail Formula
20. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Initial Markup (IMU)
Return on Assets
Current Liabilities
Cumulative Markup % Formula
21. 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
Depreciation
Markdown Cancellations
Profit Margin Analysis Formula
22. 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)
Retail Price Formula
Fixed Liabilities
Uncontrollable Errors
23. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Pricing Depends on 2 factors
Profit
Cost of Goods Sold
24. The cost of merchandise that was sold (including the method that was used to determine cost)
Late Markdowns
Markup % of Cost Formula
Cost of Goods Sold
Cash Flow Formula
25. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Markup % of Retail Formula
Retail Inventory Method
Temporary Price Reduction
26. Sales less cost of goods sold
Gross Margin
Financial Leverage Ratio Formula
Pricing Strategies: Price Ranges
New Price
27. What the retailer owns in monetary value
Original Price
Net Profit
Assets
Current Assets
28. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Cash Flow Formula
Ideal Markdown
Assets
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
Fixed Liabilities
Profit Margin Analysis Formula
Markup
30. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Dollar Markdown Formula
Net Profit
Expense Ratio Formula
Early Markdowns
31. First price or Manufacturers suggestet Retal Price (MSRP)
New Price
Price Sensitivity
Original Price
Financial Leverage Ratio Formula
32. Price Lining - price zones - price ranges
Pricing Strategies
Original Price
Ideal Markdown
Markdown Cancellation ($) Formula
33. 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.
Promotion Errors
Late Markdowns
Initial Markup (IMU)
Markdown Cancellation ($) Formula
34. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Markdown Percentage
Fixed Liabilities
Retail Price Formula
35. 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
Sell-Through Rate
Pricing Strategies: Price Zones
Current Assets
Pricing Strategies
36. Sales for the period/ average inventory
Turnover Rate Formula
Temporary Price Reduction
Financial Leverage Ratio
FIFO (First in - First out)
37. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Profit and Loss Statement (P&L Statement)
Return on Assets (ROA) Formul
Fixed Liabilities
Adage of Profitability for Retailers
38. 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
Markdown Cancellations
Balance Sheet
Promotional Markdown
39. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Pricing Strategies: Price Lining
Markdown Percentage Formula
Clearance Markdowns
40. Promotional markdown that involves selling at or near cost for promotional purposes
Pricing Depends on 2 factors
Loss-Leader
Markdown optimization
Retail Inventory Method
41. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Debt Equity Ratio Formula
Promotional Markdown
Debt Equity Ratio
42. 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
Assets
Current Ratio
GMROII (Gross Margin Return on Inventory Investment)
Profit Margin Analysis Formula
43. Net Profit After Taxes/ Net Worth
Initial Markup (IMU)
Return on Net Worth (RONW) Formula
Temporary Price Reduction
Pricing Errors
44. (Cash + Accounts Receivable) / Current Liabilities
Financial Leverage Ratio
Return on Assets (ROA) Formul
Clearance Markdowns
Acid Test or Quick Ratio (QR) Formula
45. Cash Received by the retailer-cash leaving the retailer
Operating Expenses
Liabilities
Current Ratio (CR) Formula
Cash Flow Formula
46. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Current Assets
Fixed Assets
Cost of Goods Sold (COGS) Formula
47. Financial debts incurred by a retailer
Selling Price Formula
Liabilities
Cash Flow Formula
Uncontrollable Errors
48. Original Retail price- markdown selling price
FIFO (First in - First out)
Dollar Markdown Formula
Debt Equity Ratio Formula
Cost of Goods Sold
49. 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
Operating Expenses
Current Ratio
Depreciation
Acid Test or Quick Ratio (QR) Formula
50. The energizing force that fuels and sustains our economic system
Net Sales
Original Price
Profit
Acid Test or Quick Ratio (QR) Formula