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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
Fixed Liabilities
Operating Expenses
Markdown optimization
Buying Errors
2. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Markdown Cancellations
Promotional Markdown
Temporary Price Reduction
3. 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
Balance Sheet
Initial Markup (IMU)
Return on Net Worth
4. 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
Pricing Errors
Profit Margin Analysis Formula
Initial Markup (IMU)
5. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Operating Expenses
Markdown Percentage
Early Markdowns
Expense Ratio Formula
6. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Forced Obsolescence
Early Markdowns
Current Liabilities
7. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
LIFO (last in - first out)
Net Profit
GMROII (Gross Margin Return on Inventory Investment)
8. Sales less cost of goods sold
Gross Margin
Cost of Goods Sold
Depreciation
Profit Margin Analysis Formula
9. 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
Early Markdowns
Profit Margin Analysis Formula
Markdown
Net Sales
10. Net dollar markdown/ net dollar selling price
Price Sensitivity
Early Markdowns
Markdown Percentage Formula
Expense Ratio
11. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Assets Formula
Financial Leverage Ratio
Fixed Assets
Net Profit
12. 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
Markup % of Cost Formula
Balance Sheet
Profit Margin
Loss-Leader
13. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Early Markdowns
Expense Ratio Formula
Markup
Off-Price Markdown Percentage Formula
14. Original Retail price- markdown selling price
Dollar Markdown Formula
Markdown Percentage
Return on Net Worth
Turnover Rate Formula
15. 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.
Ideal Markdown
Expense Ratio
Financial Leverage Ratio
Cost of Goods Sold
16. Current Assets/ Current Liabilities
Liabilities
The Cost Method
Profit and Loss Statement (P&L Statement)
Current Ratio (CR) Formula
17. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Markdown Cancellation ($) Formula
Net Profit
Off-Price Markdowns
Liabilities
18. Based on a calculation commonly represented as a percentage - comparing the amount of inventory a retailer receives from a manufacturer or supplier against what is actually sold to the consumer
Acid test or Quick Ratio
Sell-Through Rate
Liabilities
Temporary Price Reduction
19. Net Profit/ Net Sales
Cumulative Markup % Formula
Promotion Errors
Profit Margin Analysis Formula
Loss-Leader
20. The cost of merchandise that was sold (including the method that was used to determine cost)
Uncontrollable Errors
Buying Errors
Original Price
Cost of Goods Sold
21. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Profit Margin Analysis Formula
Sell-Through Rate
Markdown Cancellation ($) Formula
22. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Cash Flow Formula
Expense Ratio
Late Markdowns
Fixed Liabilities
23. Cost + Markup
Selling Price Formula
Liabilities
Retail Inventory Method
Early Markdowns
24. Promotional markdown that involves selling at or near cost for promotional purposes
Pricing Strategies
Loss-Leader
The Cost Method
Uncontrollable Errors
25. The retailers financial condition at a specific point in time
New Price
Retail Price Formula
Balance Sheet
Adage of Profitability for Retailers
26. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Selling Price Formula
Pricing Strategies: Price Lining
Original Price
Turnover Rate Formula
27. 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
Assets
Return on Assets (ROA) Formul
Debt Equity Ratio
GMROII (Gross Margin Return on Inventory Investment)
28. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
LIFO (last in - first out)
Fixed Assets
Selling Price Formula
Net Profit
29. Total Expenses/ Net Sales
Expense Ratio Formula
Acid test or Quick Ratio
Forced Obsolescence
Markup % of Cost Formula
30. Dollar markup ($)/ cost price ($)
Promotion Errors
Markdown Percentage Formula
Inventory
Markup % of Cost Formula
31. Price Lining - price zones - price ranges
Pricing Strategies
Sell-Through Rate
Loss-Leader
Cost of Goods Sold (COGS) Formula
32. Usually lower than original - but held for longer period
Debt Equity Ratio
Fixed Liabilities
Planned Initial Markup % Formula
Regular Price
33. (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%
Inventory
Assets Formula
Planned Initial Markup % Formula
Buying Errors
34. Short time - like 1 or 2 day sales
Price Sensitivity
Current Liabilities
Temporary Price Reduction
Return on Net Worth
35. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies
FIFO (First in - First out)
Debt Equity Ratio
Pricing Strategies: Price Zones
36. Evaluates the managament of capital
Late Markdowns
Return on Sales
Off-Price Markdowns
Profit
37. The number of items remaining in stock x dollar markdown
Cash Flow Formula
Net Profit
Markup % of Retail Formula
Markdown Cancellation ($) Formula
38. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Accounts Receivable (AR)
Regular Price
Adage of Profitability for Retailers
39. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Markdown
Return on Assets
Promotion Errors
Clearance Markdowns
40. The weather - merchandise is shopworn - economic downturn
Ideal Markdown
Profit and Loss Statement (P&L Statement)
Uncontrollable Errors
Regular Price
41. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Return on Assets
Operating Expenses
Current Liabilities
Current Ratio (CR) Formula
42. The energizing force that fuels and sustains our economic system
Turnover Rate Formula
Profit
Early Markdowns
Liabilities
43. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown Cancellation ($) Formula
Cash Flow Formula
Return on Assets
Markdown
44. 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.
Late Markdowns
Return on Assets
Cost of Goods Sold
Liabilities
45. Cost Price/ (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Retail Price Formula
Cost of Goods Sold
Profit Margin
46. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Debt Equity Ratio
Markdown Optimization
Retail Inventory Method
Pricing Strategies
47. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Pricing Depends on 2 factors
Cost Complement Formula
Return on Assets (ROA) Formul
GMROII (Gross Margin Return on Inventory Investment)
48. 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
Pricing Strategies
Off-Price Markdown Percentage Formula
Price Sensitivity
Pricing Strategies: Price Zones
49. Buying errors - promotion errors - pricing errors - uncontrollable errors
Promotional Markdown
Cost of Goods Sold (COGS) Formula
Reasons for taking Markdowns
Sell-Through Rate
50. What the retailer owns in monetary value
Cost of Goods Sold (COGS) Formula
Assets
Depreciation
Expense Ratio