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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. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
The Cost Method
Return on Assets
Current Assets
Debt Equity Ratio Formula
2. 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.
Planned Initial Markup % Formula
Return on Net Worth
Accounts Receivable (AR)
Current Ratio (CR) Formula
3. Short time - like 1 or 2 day sales
Temporary Price Reduction
5 Steps of Retail Inventory Method
Fixed Liabilities
Reasons for taking Markdowns
4. The energizing force that fuels and sustains our economic system
Profit Margin Analysis Formula
Promotion Errors
Acid Test or Quick Ratio (QR) Formula
Profit
5. Price Lining - price zones - price ranges
Expense Ratio Formula
Markup % of Retail Formula
Financial Leverage Ratio
Pricing Strategies
6. One that is just enough to move the goods
Return on Net Worth
Pricing Strategies: Price Zones
Ideal Markdown
Acid test or Quick Ratio
7. (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%
Operating Expenses
Markdown
Planned Initial Markup % Formula
Expense Ratio Formula
8. 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
GMROII (Gross Margin Return on Inventory Investment)
Off-Price Markdowns
Liabilities
Markup % of Retail Formula
9. 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
Markdown Percentage
Uncontrollable Errors
Fixed Assets
10. Current Assets/ Current Liabilities
New Price
Depreciation
Current Ratio (CR) Formula
The Cost Method
11. The prices from lowest to highest that are carried within a merchandise category
Return on Assets (ROA) Formul
Debt Equity Ratio Formula
LIFO (last in - first out)
Pricing Strategies: Price Ranges
12. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Current Assets
Markdown Cancellations
Forced Obsolescence
Return on Net Worth (RONW) Formula
13. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold (COGS) Formula
Net Profit
Debt Equity Ratio
Markdown Percentage
14. Total Markup on all goods on hand/ retail price of all goods on hand
Operating Expenses
Cumulative Markup % Formula
Financial Leverage Ratio Formula
Markdown optimization
15. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Liabilities
Markdown Optimization
Initial Markup (IMU)
Late Markdowns
16. 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.
Acid Test or Quick Ratio (QR) Formula
Late Markdowns
Inventory
Markdown Cancellation ($) Formula
17. Costs involved in running the business
LIFO (last in - first out)
Operating Expenses
Pricing Errors
Markdown
18. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
5 Steps of Retail Inventory Method
GMROII (Gross Margin Return on Inventory Investment)
Markup
19. (Cash + Accounts Receivable) / Current Liabilities
Current Liabilities
Planned Initial Markup % Formula
Fixed Liabilities
Acid Test or Quick Ratio (QR) Formula
20. Financial debts incurred by a retailer
Markup
Liabilities
Profit Margin Analysis Formula
Pricing Strategies: Price Lining
21. 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 Assets
Regular Price
Return on Net Worth
22. Sales less cost of goods sold
Pricing Strategies: Price Zones
Current Ratio
Gross Margin
Ideal Markdown
23. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Selling Price Formula
Net Profit
Turnover Rate Formula
Markdown optimization
24. Having the right merchandise - at the right time - for the right price - in the right place
Temporary Price Reduction
Profit and Loss Statement (P&L Statement)
Adage of Profitability for Retailers
Early Markdowns
25. Revenues received by a retailer
Net Sales
Reasons for taking Markdowns
Turnover Rate Formula
Fixed Assets
26. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Markdown Optimization
Current Assets
Promotion Errors
27. 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
Early Markdowns
Expense Ratio
Loss-Leader
Temporary Price Reduction
28. 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
Gross Margin Return on Inventory Investment-GMROI Formula
Profit Margin
The Cost Method
Original Price
29. Ranges of prices that appeals for a particular group of consumers
Temporary Price Reduction
Return on Assets (ROA) Formul
FIFO (First in - First out)
Pricing Strategies: Price Zones
30. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markup
Markdown Percentage
Temporary Price Reduction
Return on Net Worth
31. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Profit and Loss Statement (P&L Statement)
Promotional Markdown
Markdown Optimization
Current Liabilities
32. 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
Markup % of Retail Formula
Return on Assets (ROA) Formul
5 Steps of Retail Inventory Method
Late Markdowns
33. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Markup % of Cost Formula
Buying Errors
Profit and Loss Statement (P&L Statement)
Price Sensitivity
34. Cash Received by the retailer-cash leaving the retailer
Assets
Temporary Price Reduction
Cash Flow Formula
Return on Net Worth (RONW) Formula
35. Dollar markup ($)/ retail price ($)
Off-Price Markdowns
5 Steps of Retail Inventory Method
Markup % of Retail Formula
Current Liabilities
36. Based on a calculation commonly represented as a percentage - comparing the amount of inventory a retailer receives from a manufacturer or supplier against what is actually sold to the consumer
Markdown Cancellations
Sell-Through Rate
FIFO (First in - First out)
Markdown Optimization
37. Can be transformed simply and rapidly into cash
Current Assets
Selling Price Formula
Assets
Off-Price Markdown Percentage Formula
38. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Profit Margin Analysis Formula
Clearance Markdowns
Financial Leverage Ratio
Current Assets
39. Buying errors - promotion errors - pricing errors - uncontrollable errors
Markdown Cancellation ($) Formula
Reasons for taking Markdowns
Return on Net Worth
Profit Margin Analysis Formula
40. Improper displays - merchandise returns due to high pressure selling
Profit
Fixed Assets
Promotion Errors
Cost of Goods Sold
41. Original Retail price- markdown selling price
Off-Price Markdown Percentage Formula
Late Markdowns
Dollar Markdown Formula
Ideal Markdown
42. Promotional markdown that involves selling at or near cost for promotional purposes
Financial Leverage Ratio Formula
Fixed Assets
Markup
Loss-Leader
43. Current Liabilites/ Net Worth
Financial Leverage Ratio Formula
Debt Equity Ratio Formula
Pricing Strategies: Price Zones
Cost Complement Formula
44. 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
Price Sensitivity
Net Sales
Current Ratio (CR) Formula
Profit Margin
45. Liabilities+ Owner's equity or net worth
Markdown Percentage Formula
Markup % of Retail Formula
Assets Formula
Inventory
46. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
GMROII (Gross Margin Return on Inventory Investment)
Assets
Off-Price Markdown Percentage Formula
Profit and Loss Statement (P&L Statement)
47. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Markdown optimization
Regular Price
Off-Price Markdown Percentage Formula
Markup % of Retail Formula
48. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Financial Leverage Ratio
Current Ratio
Cumulative Markup % Formula
Return on Net Worth
49. 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
Cost of Goods Sold (COGS) Formula
Cumulative Markup
Gross Margin
50. 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
Acid test or Quick Ratio
Regular Price
Cumulative Markup % Formula