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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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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. Cost + Markup
Expense Ratio Formula
Profit Margin Analysis Formula
Selling Price Formula
Markup % of Retail Formula
2. Total Markup on all goods on hand/ retail price of all goods on hand
Return on Assets
Markdown Percentage Formula
Cumulative Markup % Formula
Pricing Errors
3. Having the right merchandise - at the right time - for the right price - in the right place
Markdown Cancellation ($) Formula
Buying Errors
Adage of Profitability for Retailers
Profit Margin
4. Indicates gross margin derived from the sales of merchandise and it's ability to cover operating expenses. Helps a retailer determine how much rent they should pay - what salary the owner should draw - and how much they should pay their associates.
Temporary Price Reduction
Assets
Pricing Strategies: Price Zones
Expense Ratio
5. Original Retail price- markdown selling price
Loss-Leader
Net Profit
Dollar Markdown Formula
Current Liabilities
6. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Expense Ratio
Markdown Cancellations
Buying Errors
Return on Net Worth
7. What the retailer owns in monetary value
Late Markdowns
Current Ratio
Fixed Liabilities
Assets
8. Dollar markup ($)/ retail price ($)
Markdown Percentage Formula
Operating Expenses
Return on Net Worth
Markup % of Retail Formula
9. Financial debts incurred by a retailer
Current Ratio
Liabilities
Initial Markup (IMU)
Depreciation
10. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Dollar Markdown Formula
Price Sensitivity
Operating Expenses
11. 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.
Selling Price Formula
Gross Margin
Markup
Acid test or Quick Ratio
12. Can be transformed simply and rapidly into cash
Off-Price Markdown Percentage Formula
Cash Flow Formula
Pricing Strategies
Current Assets
13. 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.
Acid Test or Quick Ratio (QR) Formula
Return on Assets (ROA) Formul
Acid test or Quick Ratio
Uncontrollable Errors
14. 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
Markup % of Cost Formula
Fixed Assets
Profit Margin
Pricing Strategies: Price Ranges
15. Sales less cost of goods sold
Gross Margin
Dollar Markdown Formula
Reasons for taking Markdowns
Return on Net Worth (RONW) Formula
16. The energizing force that fuels and sustains our economic system
Retail Price Formula
Current Liabilities
Profit
Current Ratio (CR) Formula
17. 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
LIFO (last in - first out)
Pricing Strategies
Return on Net Worth
FIFO (First in - First out)
18. Total Assets/ Net Worth
Debt Equity Ratio Formula
Markdown Optimization
Return on Net Worth
Financial Leverage Ratio Formula
19. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Profit and Loss Statement (P&L Statement)
Current Liabilities
Price Sensitivity
20. Net Profit After Taxes/ Net Worth
Cumulative Markup
Pricing Strategies: Price Zones
Return on Net Worth (RONW) Formula
Promotion Errors
21. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Accounts Receivable (AR)
Retail Inventory Method
Cost of Goods Sold (COGS) Formula
Gross Margin Return on Inventory Investment-GMROI Formula
22. 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
Retail Price Formula
Pricing Depends on 2 factors
Balance Sheet
23. Total Expenses/ Net Sales
Markdown Percentage
Cumulative Markup
Selling Price Formula
Expense Ratio Formula
24. Price is changed (up or down)
Cash Flow Formula
LIFO (last in - first out)
Clearance Markdowns
New Price
25. 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
Off-Price Markdowns
Pricing Strategies: Price Zones
Financial Leverage Ratio
26. Short time - like 1 or 2 day sales
Return on Sales
Pricing Depends on 2 factors
Temporary Price Reduction
Pricing Strategies: Price Zones
27. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Temporary Price Reduction
Net Sales
Pricing Depends on 2 factors
Off-Price Markdown Percentage Formula
28. Promotional markdown that involves selling at or near cost for promotional purposes
Buying Errors
Return on Sales
Current Assets
Loss-Leader
29. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Markdown Percentage
Forced Obsolescence
Balance Sheet
30. Current Liabilites/ Net Worth
Financial Leverage Ratio Formula
Pricing Strategies: Price Lining
Pricing Strategies
Debt Equity Ratio Formula
31. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Markdown Cancellation ($) Formula
Net Profit
Net Sales
32. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
The Cost Method
Early Markdowns
5 Steps of Retail Inventory Method
33. 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
Ideal Markdown
Acid Test or Quick Ratio (QR) Formula
Price Sensitivity
Cost Complement Formula
34. 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
Markup % of Retail Formula
Acid Test or Quick Ratio (QR) Formula
Late Markdowns
GMROII (Gross Margin Return on Inventory Investment)
35. Net Profit After Taxes/ Total Assets
Return on Assets (ROA) Formul
Markdown
Profit Margin
Sell-Through Rate
36. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Financial Leverage Ratio Formula
Cumulative Markup
Fixed Liabilities
Inventory
37. The retailers financial condition at a specific point in time
Pricing Strategies: Price Lining
Dollar Markdown Formula
Balance Sheet
Return on Sales
38. 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)
Markdown Cancellation ($) Formula
Cost of Goods Sold (COGS) Formula
Fixed Assets
39. 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)
Reasons for taking Markdowns
Current Liabilities
Retail Price Formula
40. Ranges of prices that appeals for a particular group of consumers
Gross Margin
Pricing Strategies: Price Zones
Markdown optimization
Net Profit
41. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Clearance Markdowns
Assets
Debt Equity Ratio Formula
Off-Price Markdowns
42. Usually lower than original - but held for longer period
Markdown
New Price
Markup % of Cost Formula
Regular Price
43. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Current Ratio
Forced Obsolescence
Profit Margin Analysis Formula
Markdown Percentage
44. 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
Loss-Leader
Return on Assets
Current Ratio
Financial Leverage Ratio Formula
45. Revenues received by a retailer
Net Sales
Assets
Net Profit
Profit and Loss Statement (P&L Statement)
46. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Pricing Depends on 2 factors
Uncontrollable Errors
Current Liabilities
Current Ratio
47. Evaluates the managament of capital
Ideal Markdown
Uncontrollable Errors
Return on Net Worth (RONW) Formula
Return on Sales
48. Price Lining - price zones - price ranges
Pricing Strategies: Price Zones
Pricing Strategies
Regular Price
Debt Equity Ratio
49. One that is just enough to move the goods
Ideal Markdown
Forced Obsolescence
Cost Complement Formula
Sell-Through Rate
50. 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.
Initial Markup (IMU)
Assets
Early Markdowns
Promotional Markdown
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