Test your basic knowledge |

Retail Financials

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. Sales less cost of goods sold






2. 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






3. 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.






4. The retailers financial condition at a specific point in time






5. (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%






6. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.






7. Having the right merchandise - at the right time - for the right price - in the right place






8. Dollar markup ($)/ cost price ($)






9. Total Expenses/ Net Sales






10. Net Profit/ Net Sales






11. 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






12. 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






13. The energizing force that fuels and sustains our economic system






14. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit






15. Net Profit After Taxes/ Total Assets






16. 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






17. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)






18. 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






19. Merchandise Available for sale at cost/ Merchandise available for sale at retail






20. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.






21. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise






22. 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.






23. Sales for the period/ average inventory






24. Short time - like 1 or 2 day sales






25. 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






26. Net dollar markdown/ net dollar selling price






27. Can be transformed simply and rapidly into cash






28. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)






29. Liabilities+ Owner's equity or net worth






30. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down






31. Original Retail price- markdown selling price






32. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.






33. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented






34. Net Profit After Taxes/ Net Worth






35. Cost Price/ (100%-markup %)






36. 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.






37. Price Lining - price zones - price ranges






38. 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.






39. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)






40. 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






41. Promotional markdown that involves selling at or near cost for promotional purposes






42. First price or Manufacturers suggestet Retal Price (MSRP)






43. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)






44. 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.






45. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes






46. Usually lower than original - but held for longer period






47. 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






48. 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






49. Cost + Markup






50. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)