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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. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Fixed Liabilities
Net Profit
Turnover Rate Formula
Late Markdowns
2. 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
Pricing Depends on 2 factors
Expense Ratio Formula
Profit Margin
Forced Obsolescence
3. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Net Profit
Initial Markup (IMU)
Debt Equity Ratio Formula
Return on Assets (ROA) Formul
4. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
The Cost Method
Return on Assets
Fixed Assets
Financial Leverage Ratio
5. 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
Acid Test or Quick Ratio (QR) Formula
Retail Price Formula
5 Steps of Retail Inventory Method
Gross Margin Return on Inventory Investment-GMROI Formula
6. Net Profit After Taxes/ Total Assets
Promotion Errors
Debt Equity Ratio
Return on Assets (ROA) Formul
Pricing Strategies: Price Lining
7. Short time - like 1 or 2 day sales
LIFO (last in - first out)
Uncontrollable Errors
Temporary Price Reduction
Price Sensitivity
8. 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.
Promotional Markdown
Pricing Depends on 2 factors
Temporary Price Reduction
Markdown Percentage Formula
9. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Original Price
Retail Price Formula
Fixed Assets
Markdown Cancellations
10. Cost Price/ (100%-markup %)
Current Ratio (CR) Formula
Early Markdowns
Retail Price Formula
Cumulative Markup % Formula
11. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Current Ratio (CR) Formula
Return on Sales
Markdown optimization
12. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Fixed Liabilities
Profit Margin
Markup
13. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Financial Leverage Ratio Formula
Return on Net Worth
Sell-Through Rate
Promotion Errors
14. 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 and Loss Statement (P&L Statement)
Sell-Through Rate
Debt Equity Ratio Formula
Financial Leverage Ratio
15. Improper displays - merchandise returns due to high pressure selling
Profit Margin Analysis Formula
Markdown optimization
Promotion Errors
Markup
16. Merchandise Available for sale at cost/ Merchandise available for sale at retail
The Cost Method
Fixed Assets
Current Assets
Cost Complement Formula
17. 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.
Return on Net Worth
Loss-Leader
Expense Ratio
Reasons for taking Markdowns
18. Dollar markup ($)/ retail price ($)
Markup % of Cost Formula
Return on Assets (ROA) Formul
Markup % of Retail Formula
Markdown
19. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Profit and Loss Statement (P&L Statement)
Cost of Goods Sold (COGS) Formula
Current Ratio (CR) Formula
20. 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.
Return on Net Worth
Expense Ratio
Markup
Pricing Depends on 2 factors
21. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Return on Assets
Markdown
Current Ratio (CR) Formula
Current Assets
22. Sales less cost of goods sold
Gross Margin
Pricing Errors
Sell-Through Rate
Profit Margin Analysis Formula
23. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Markdown optimization
Accounts Receivable (AR)
Current Liabilities
Return on Net Worth
24. (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%
Cash Flow Formula
Planned Initial Markup % Formula
GMROII (Gross Margin Return on Inventory Investment)
Operating Expenses
25. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Markdown
Pricing Strategies: Price Lining
Financial Leverage Ratio Formula
Liabilities
26. Having the right merchandise - at the right time - for the right price - in the right place
Regular Price
New Price
Cash Flow Formula
Adage of Profitability for Retailers
27. Usually lower than original - but held for longer period
Regular Price
Selling Price Formula
Cumulative Markup % Formula
Fixed Assets
28. Revenues received by a retailer
Return on Net Worth (RONW) Formula
Net Sales
Acid Test or Quick Ratio (QR) Formula
Balance Sheet
29. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Pricing Strategies
Return on Sales
Markdown Cancellation ($) Formula
30. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Markdown optimization
Pricing Errors
Adage of Profitability for Retailers
31. Costs involved in running the business
Retail Inventory Method
Operating Expenses
Turnover Rate Formula
Pricing Errors
32. The weather - merchandise is shopworn - economic downturn
Reasons for taking Markdowns
Markdown Cancellations
Uncontrollable Errors
Liabilities
33. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
Return on Net Worth (RONW) Formula
Fixed Liabilities
Profit Margin
34. Assets collected within one year. Due to the widespread use of credit cards - AR for retailers has diminished with exceptions such as lay-a-way.
Markdown
Accounts Receivable (AR)
Debt Equity Ratio
Markup % of Retail Formula
35. Merchandise will sell at highest price longer period of time - appear exclusive - sale of goods at regular price is not disrupted - greater amount of goods can be accumulated and then marked down.
Liabilities
Original Price
Late Markdowns
Acid Test or Quick Ratio (QR) Formula
36. One that is just enough to move the goods
Markdown Cancellation ($) Formula
Fixed Assets
Ideal Markdown
Return on Sales
37. Net dollar markdown/ net dollar selling price
Turnover Rate Formula
Markdown Percentage Formula
Debt Equity Ratio Formula
GMROII (Gross Margin Return on Inventory Investment)
38. The number of items remaining in stock x dollar markdown
Markdown Cancellations
Markdown Cancellation ($) Formula
GMROII (Gross Margin Return on Inventory Investment)
Assets Formula
39. Price is changed (up or down)
Current Liabilities
Expense Ratio Formula
New Price
GMROII (Gross Margin Return on Inventory Investment)
40. In Cost Method. Merchandise sold during a time period is assumed to be sold in the order the merchandise was received. Merchandise on hand for the longest period of time is sold first. Therefore - the ending inventory reflects the items in stock for
FIFO (First in - First out)
Off-Price Markdown Percentage Formula
Retail Inventory Method
Markup
41. In the Cost Method. Merchandise most recently purchased is assumed to have been sold first. Therefore - the ending inventory reflects the items in stock for the longest period of time. Produces lowest ending inventory value and highest cost of goods
Selling Price Formula
LIFO (last in - first out)
The Cost Method
Gross Margin
42. What the retailer owns in monetary value
Assets
Forced Obsolescence
Regular Price
Markdown
43. Price reduction for merchandise that has not lived up to buyers' expectations. Includes broken assortments of merchandise - merchandise lines that buyers no longer want to carry - shopworn goods - items that haven't sold because of an event beyond bu
Clearance Markdowns
Net Profit
Markup % of Cost Formula
Markdown Cancellation ($) Formula
44. The energizing force that fuels and sustains our economic system
Expense Ratio Formula
Profit
Markdown Cancellation ($) Formula
Pricing Strategies
45. The higher the ratio the quicker current liabilities can be paid. This ratio also indicates the margin of safety a retailer has on hand to cover possible shrinkages
Current Ratio
Return on Net Worth (RONW) Formula
Regular Price
Forced Obsolescence
46. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Assets Formula
Off-Price Markdown Percentage Formula
Inventory
Markup
47. Liabilities+ Owner's equity or net worth
Pricing Errors
Markdown Percentage Formula
Assets Formula
Current Assets
48. Total Expenses/ Net Sales
Depreciation
Current Ratio
Expense Ratio Formula
Cost of Goods Sold (COGS) Formula
49. Current Assets/ Current Liabilities
Current Ratio (CR) Formula
Retail Price Formula
Markdown Cancellation ($) Formula
Current Ratio
50. 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
Financial Leverage Ratio
The Cost Method
Markdown optimization
Original Price
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