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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. 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
Selling Price Formula
Dollar Markdown Formula
Acid test or Quick Ratio
Sell-Through Rate
2. The energizing force that fuels and sustains our economic system
Profit
Current Ratio
Markdown Optimization
Planned Initial Markup % Formula
3. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Late Markdowns
Pricing Strategies: Price Lining
Current Liabilities
Pricing Strategies: Price Ranges
4. Short time - like 1 or 2 day sales
Pricing Strategies: Price Lining
Uncontrollable Errors
Temporary Price Reduction
Markup
5. Buying errors - promotion errors - pricing errors - uncontrollable errors
Return on Assets
Reasons for taking Markdowns
New Price
Price Sensitivity
6. Total Markup on all goods on hand/ retail price of all goods on hand
Financial Leverage Ratio
Markup
Ideal Markdown
Cumulative Markup % Formula
7. 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
Pricing Strategies: Price Lining
GMROII (Gross Margin Return on Inventory Investment)
Return on Assets (ROA) Formul
Adage of Profitability for Retailers
8. 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
Current Assets
Markdown optimization
Early Markdowns
Operating Expenses
9. Total Expenses/ Net Sales
Pricing Strategies: Price Lining
Expense Ratio Formula
Markdown
Cash Flow Formula
10. Current Assets/ Current Liabilities
FIFO (First in - First out)
Cost of Goods Sold
Current Ratio (CR) Formula
Forced Obsolescence
11. Current Liabilites/ Net Worth
Acid Test or Quick Ratio (QR) Formula
Liabilities
Assets Formula
Debt Equity Ratio Formula
12. Price is changed (up or down)
New Price
Profit Margin Analysis Formula
Pricing Strategies
Turnover Rate Formula
13. Dollar markup ($)/ cost price ($)
Accounts Receivable (AR)
Regular Price
Markup % of Cost Formula
Return on Sales
14. The cost of merchandise that was sold (including the method that was used to determine cost)
Return on Net Worth (RONW) Formula
Current Liabilities
Promotional Markdown
Cost of Goods Sold
15. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Depreciation
Balance Sheet
Profit and Loss Statement (P&L Statement)
16. The prices from lowest to highest that are carried within a merchandise category
Promotional Markdown
Pricing Strategies: Price Ranges
Current Liabilities
LIFO (last in - first out)
17. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Initial Markup (IMU)
Markdown Optimization
Price Sensitivity
Off-Price Markdowns
18. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
5 Steps of Retail Inventory Method
Debt Equity Ratio Formula
Acid test or Quick Ratio
Off-Price Markdown Percentage Formula
19. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Regular Price
Ideal Markdown
Pricing Strategies: Price Zones
Cost of Goods Sold (COGS) Formula
20. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Expense Ratio
GMROII (Gross Margin Return on Inventory Investment)
Fixed Liabilities
Net Profit
21. Cost + Markup
Selling Price Formula
Debt Equity Ratio
Accounts Receivable (AR)
Off-Price Markdown Percentage Formula
22. Cost Price/ (100%-markup %)
Pricing Strategies: Price Ranges
Ideal Markdown
Retail Price Formula
Expense Ratio
23. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Cash Flow Formula
New Price
Expense Ratio
24. 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
Debt Equity Ratio Formula
Promotional Markdown
The Cost Method
Regular Price
25. 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.
Gross Margin Return on Inventory Investment-GMROI Formula
Promotional Markdown
Pricing Depends on 2 factors
Markdown optimization
26. Priced too high initially - priced too low - selling price of competitors
Markup
Fixed Assets
Return on Net Worth
Pricing Errors
27. 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
GMROII (Gross Margin Return on Inventory Investment)
Assets
Expense Ratio
28. Having the right merchandise - at the right time - for the right price - in the right place
Return on Net Worth
Fixed Liabilities
Planned Initial Markup % Formula
Adage of Profitability for Retailers
29. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
Financial Leverage Ratio
Uncontrollable Errors
FIFO (First in - First out)
30. Evaluates the managament of capital
Return on Sales
Net Profit
Price Sensitivity
Cost Complement Formula
31. The retailers financial condition at a specific point in time
Sell-Through Rate
Late Markdowns
Promotional Markdown
Balance Sheet
32. 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)
Cost Complement Formula
LIFO (last in - first out)
Return on Net Worth (RONW) Formula
33. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Selling Price Formula
Clearance Markdowns
Debt Equity Ratio
Markdown Percentage
34. 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
Profit Margin Analysis Formula
Loss-Leader
Profit Margin
Markdown Optimization
35. Net Profit After Taxes/ Net Worth
Turnover Rate Formula
Current Ratio
Return on Net Worth (RONW) Formula
GMROII (Gross Margin Return on Inventory Investment)
36. 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
Financial Leverage Ratio Formula
Debt Equity Ratio
Forced Obsolescence
Retail Inventory Method
37. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Regular Price
Dollar Markdown Formula
Off-Price Markdowns
Markdown Percentage
38. Total Assets/ Net Worth
Profit Margin Analysis Formula
Expense Ratio Formula
Inventory
Financial Leverage Ratio Formula
39. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Gross Margin
Return on Net Worth
Inventory
Markdown Percentage
40. Sales for the period/ average inventory
Pricing Strategies: Price Lining
Late Markdowns
Turnover Rate Formula
Reasons for taking Markdowns
41. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Operating Expenses
Markdown Percentage
Adage of Profitability for Retailers
42. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Financial Leverage Ratio Formula
Forced Obsolescence
Markdown Cancellations
Original Price
43. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Promotion Errors
Liabilities
Planned Initial Markup % Formula
Depreciation
44. 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
Accounts Receivable (AR)
Expense Ratio Formula
Pricing Depends on 2 factors
LIFO (last in - first out)
45. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Debt Equity Ratio
Acid test or Quick Ratio
Current Liabilities
Initial Markup (IMU)
46. (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%
Pricing Strategies: Price Ranges
Cost of Goods Sold (COGS) Formula
Planned Initial Markup % Formula
Pricing Strategies: Price Zones
47. Price Lining - price zones - price ranges
Liabilities
Dollar Markdown Formula
Pricing Strategies
Markup % of Retail Formula
48. 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
Cost Complement Formula
5 Steps of Retail Inventory Method
Gross Margin
49. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
New Price
Cumulative Markup
Adage of Profitability for Retailers
Markdown Cancellations
50. 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.
Pricing Depends on 2 factors
Adage of Profitability for Retailers
Markup
Profit Margin