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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. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Forced Obsolescence
Expense Ratio
Temporary Price Reduction
Markdown Cancellations
2. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Cumulative Markup
Retail Inventory Method
Pricing Strategies: Price Lining
Return on Net Worth
3. Liabilities+ Owner's equity or net worth
Assets
Cost of Goods Sold
Assets Formula
Pricing Strategies: Price Zones
4. Cost Price/ (100%-markup %)
Cumulative Markup
Accounts Receivable (AR)
Balance Sheet
Retail Price Formula
5. Total Assets/ Net Worth
Balance Sheet
Financial Leverage Ratio Formula
Current Liabilities
Markdown Cancellations
6. Net dollar markdown/ net dollar selling price
Current Liabilities
Markdown Percentage Formula
Markdown optimization
Pricing Strategies
7. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Expense Ratio Formula
Cumulative Markup
Financial Leverage Ratio Formula
Financial Leverage Ratio
8. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Ideal Markdown
Clearance Markdowns
Cost of Goods Sold (COGS) Formula
Return on Assets
9. Revenues received by a retailer
Accounts Receivable (AR)
Return on Sales
Clearance Markdowns
Net Sales
10. Can be transformed simply and rapidly into cash
Promotion Errors
Return on Sales
Turnover Rate Formula
Current Assets
11. 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.
Cash Flow Formula
Balance Sheet
Selling Price Formula
Markup
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
Balance Sheet
Sell-Through Rate
Promotion Errors
Retail Inventory Method
13. Usually lower than original - but held for longer period
Current Ratio
Regular Price
Adage of Profitability for Retailers
Temporary Price Reduction
14. 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.
Assets
Current Liabilities
Accounts Receivable (AR)
New Price
15. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Debt Equity Ratio
Current Liabilities
Inventory
Markup % of Cost Formula
16. Current Liabilites/ Net Worth
Buying Errors
Current Assets
Debt Equity Ratio Formula
Assets Formula
17. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Expense Ratio Formula
Depreciation
Return on Net Worth
Expense Ratio
18. Ranges of prices that appeals for a particular group of consumers
Markdown Cancellation ($) Formula
Pricing Strategies: Price Zones
Cost Complement Formula
Reasons for taking Markdowns
19. Price Lining - price zones - price ranges
Pricing Strategies
Markup % of Cost Formula
Profit and Loss Statement (P&L Statement)
Net Profit
20. Net Profit After Taxes/ Total Assets
Current Assets
Return on Assets (ROA) Formul
Balance Sheet
Cumulative Markup
21. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Markdown Percentage
Assets
Profit and Loss Statement (P&L Statement)
Return on Sales
22. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Markup
Profit and Loss Statement (P&L Statement)
Net Profit
Fixed Assets
23. One that is just enough to move the goods
Gross Margin
Assets Formula
Debt Equity Ratio Formula
Ideal Markdown
24. 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
Markdown Cancellations
Markdown Percentage Formula
Debt Equity Ratio
Turnover Rate Formula
25. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Return on Assets
Planned Initial Markup % Formula
Cumulative Markup
Depreciation
26. 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.
Pricing Strategies
Cumulative Markup
Promotional Markdown
Pricing Depends on 2 factors
27. 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.
New Price
Return on Sales
Inventory
Return on Assets
28. Cost + Markup
Expense Ratio Formula
Late Markdowns
Selling Price Formula
Off-Price Markdown Percentage Formula
29. The energizing force that fuels and sustains our economic system
Profit
Profit Margin Analysis Formula
Acid test or Quick Ratio
Forced Obsolescence
30. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Markdown Percentage Formula
Cost of Goods Sold
Return on Net Worth
31. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Expense Ratio Formula
Return on Sales
Retail Price Formula
Off-Price Markdowns
32. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Financial Leverage Ratio
Pricing Strategies: Price Lining
Profit Margin
Clearance Markdowns
33. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Accounts Receivable (AR)
Profit Margin
GMROII (Gross Margin Return on Inventory Investment)
34. Sales less cost of goods sold
Gross Margin
Markdown optimization
Turnover Rate Formula
Price Sensitivity
35. 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
Clearance Markdowns
Price Sensitivity
Reasons for taking Markdowns
Markup
36. Improper displays - merchandise returns due to high pressure selling
Fixed Assets
Promotion Errors
Acid Test or Quick Ratio (QR) Formula
Sell-Through Rate
37. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Markdown optimization
Selling Price Formula
Retail Inventory Method
Initial Markup (IMU)
38. 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
Cost of Goods Sold
Initial Markup (IMU)
Sell-Through Rate
39. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Buying Errors
Planned Initial Markup % Formula
Cost of Goods Sold
Sell-Through Rate
40. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Pricing Depends on 2 factors
FIFO (First in - First out)
Net Profit
Return on Sales
41. Price is changed (up or down)
Assets Formula
New Price
Profit
Price Sensitivity
42. Short time - like 1 or 2 day sales
Temporary Price Reduction
Regular Price
Expense Ratio
Markdown
43. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold (COGS) Formula
Temporary Price Reduction
Current Ratio
Clearance Markdowns
44. The retailers financial condition at a specific point in time
Markdown
Balance Sheet
Inventory
Acid test or Quick Ratio
45. Financial debts incurred by a retailer
Cumulative Markup
Return on Net Worth (RONW) Formula
Liabilities
Pricing Strategies: Price Zones
46. 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
Return on Net Worth
Fixed Assets
Early Markdowns
Operating Expenses
47. (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%
New Price
Cost Complement Formula
Planned Initial Markup % Formula
Gross Margin
48. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Price Sensitivity
Assets Formula
Markdown Percentage Formula
49. The number of items remaining in stock x dollar markdown
Pricing Errors
Debt Equity Ratio
Markdown Cancellation ($) Formula
Assets Formula
50. 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
LIFO (last in - first out)
GMROII (Gross Margin Return on Inventory Investment)
Markdown Percentage
Off-Price Markdowns