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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. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Current Liabilities
Return on Assets (ROA) Formul
Markdown optimization
Retail Inventory Method
2. Revenues received by a retailer
Expense Ratio
Net Sales
Assets
Acid test or Quick Ratio
3. 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
Accounts Receivable (AR)
Sell-Through Rate
Loss-Leader
Pricing Strategies: Price Ranges
4. 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)
Operating Expenses
Early Markdowns
Clearance Markdowns
5. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Current Assets
Pricing Strategies: Price Lining
New Price
Early Markdowns
6. The energizing force that fuels and sustains our economic system
Markup % of Retail Formula
Profit
Retail Price Formula
Cost of Goods Sold
7. Total Markup on all goods on hand/ retail price of all goods on hand
Regular Price
Adage of Profitability for Retailers
Cumulative Markup % Formula
Retail Inventory Method
8. Net Profit After Taxes/ Total Assets
Expense Ratio
Buying Errors
Cumulative Markup
Return on Assets (ROA) Formul
9. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Pricing Errors
Reasons for taking Markdowns
Return on Net Worth
Off-Price Markdowns
10. 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
Acid Test or Quick Ratio (QR) Formula
Return on Assets
Assets Formula
The Cost Method
11. Liabilities+ Owner's equity or net worth
Cost of Goods Sold (COGS) Formula
Buying Errors
Inventory
Assets Formula
12. Original Retail price- markdown selling price
Gross Margin Return on Inventory Investment-GMROI Formula
Liabilities
Off-Price Markdowns
Dollar Markdown Formula
13. Price Lining - price zones - price ranges
Pricing Strategies
Markup
Acid test or Quick Ratio
Balance Sheet
14. Financial debts incurred by a retailer
Price Sensitivity
Planned Initial Markup % Formula
Cumulative Markup % Formula
Liabilities
15. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Uncontrollable Errors
Current Ratio (CR) Formula
Net Profit
Return on Assets
16. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold (COGS) Formula
Inventory
Selling Price Formula
Early Markdowns
17. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
Assets
Markdown Optimization
Current Ratio (CR) Formula
18. 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.
Promotional Markdown
Profit Margin Analysis Formula
Reasons for taking Markdowns
Acid test or Quick Ratio
19. 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
Early Markdowns
Debt Equity Ratio
Markdown Cancellation ($) Formula
Planned Initial Markup % Formula
20. Cost Price/ (100%-markup %)
Liabilities
Buying Errors
Ideal Markdown
Retail Price Formula
21. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Cost of Goods Sold (COGS) Formula
Profit and Loss Statement (P&L Statement)
Price Sensitivity
Current Liabilities
22. 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
Promotional Markdown
5 Steps of Retail Inventory Method
Markup % of Cost Formula
Markdown optimization
23. 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)
Price Sensitivity
Markdown
Gross Margin
24. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Return on Net Worth (RONW) Formula
Expense Ratio
Selling Price Formula
25. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Liabilities
Forced Obsolescence
Temporary Price Reduction
Accounts Receivable (AR)
26. The cost of merchandise that was sold (including the method that was used to determine cost)
Pricing Errors
Cost of Goods Sold
Original Price
Pricing Strategies: Price Lining
27. 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.
Operating Expenses
Promotional Markdown
Markdown Optimization
Markdown Percentage Formula
28. Short time - like 1 or 2 day sales
Price Sensitivity
Temporary Price Reduction
Regular Price
Markdown Percentage Formula
29. 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 Assets
Net Profit
Assets
Current Ratio
30. Evaluates the managament of capital
Early Markdowns
Liabilities
Return on Assets (ROA) Formul
Return on Sales
31. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Retail Inventory Method
Acid Test or Quick Ratio (QR) Formula
Gross Margin
Reasons for taking Markdowns
32. Net dollar markdown/ net dollar selling price
Return on Net Worth (RONW) Formula
GMROII (Gross Margin Return on Inventory Investment)
Markdown Percentage Formula
Financial Leverage Ratio Formula
33. Cash Received by the retailer-cash leaving the retailer
Price Sensitivity
Cash Flow Formula
Debt Equity Ratio Formula
Initial Markup (IMU)
34. 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
Expense Ratio Formula
Price Sensitivity
Cumulative Markup % Formula
Loss-Leader
35. Can be transformed simply and rapidly into cash
Return on Net Worth
Markup % of Retail Formula
Current Assets
Profit Margin
36. Dollar markup ($)/ retail price ($)
Cumulative Markup
Pricing Strategies: Price Zones
Markup % of Retail Formula
New Price
37. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Turnover Rate Formula
Return on Net Worth (RONW) Formula
New Price
38. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Planned Initial Markup % Formula
Off-Price Markdown Percentage Formula
Net Profit
Markdown Percentage Formula
39. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Regular Price
Acid Test or Quick Ratio (QR) Formula
Return on Net Worth
40. Net Profit/ Net Sales
Inventory
Gross Margin
Profit Margin Analysis Formula
Assets Formula
41. Sales less cost of goods sold
Gross Margin
Cost of Goods Sold (COGS) Formula
Assets
Pricing Errors
42. Total Expenses/ Net Sales
Reasons for taking Markdowns
Assets
Expense Ratio Formula
Markup
43. Dollar markup ($)/ cost price ($)
Pricing Strategies: Price Zones
Return on Assets (ROA) Formul
Markup % of Cost Formula
Cost of Goods Sold
44. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Pricing Strategies: Price Lining
Pricing Strategies
Acid Test or Quick Ratio (QR) Formula
45. The number of items remaining in stock x dollar markdown
Operating Expenses
Liabilities
Markdown Cancellation ($) Formula
Markup % of Retail Formula
46. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Fixed Liabilities
Markdown Cancellation ($) Formula
Expense Ratio
47. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Current Liabilities
Pricing Strategies
Financial Leverage Ratio
Turnover Rate Formula
48. 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
Late Markdowns
Financial Leverage Ratio
LIFO (last in - first out)
Promotion Errors
49. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Financial Leverage Ratio
Pricing Strategies
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Depends on 2 factors
50. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Uncontrollable Errors
Markdown Percentage
Cost of Goods Sold
Markup % of Cost Formula