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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. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Profit Margin
Expense Ratio
Current Liabilities
Return on Assets (ROA) Formul
2. The prices from lowest to highest that are carried within a merchandise category
Forced Obsolescence
Markup % of Retail Formula
Pricing Strategies: Price Ranges
Promotion Errors
3. Price is changed (up or down)
Retail Inventory Method
Regular Price
Cumulative Markup
New Price
4. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Loss-Leader
Initial Markup (IMU)
Profit
5. Cost Price/ (100%-markup %)
Promotion Errors
Retail Price Formula
Markdown Percentage
Fixed Assets
6. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Liabilities
Profit and Loss Statement (P&L Statement)
Buying Errors
Return on Assets
7. 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
Markdown Optimization
Early Markdowns
Net Profit
Loss-Leader
8. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Adage of Profitability for Retailers
Financial Leverage Ratio
Markup
Markdown optimization
9. 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.
Profit
Acid Test or Quick Ratio (QR) Formula
Accounts Receivable (AR)
Fixed Liabilities
10. Financial debts incurred by a retailer
Liabilities
Fixed Liabilities
Uncontrollable Errors
Profit Margin
11. Evaluates the managament of capital
Return on Sales
Markdown Percentage Formula
Return on Assets (ROA) Formul
Profit and Loss Statement (P&L Statement)
12. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Buying Errors
Fixed Liabilities
LIFO (last in - first out)
Ideal Markdown
13. The retailers financial condition at a specific point in time
Markdown Cancellations
Adage of Profitability for Retailers
Expense Ratio
Balance Sheet
14. Promotional markdown that involves selling at or near cost for promotional purposes
Pricing Strategies: Price Zones
Loss-Leader
Expense Ratio
Return on Assets
15. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Profit Margin Analysis Formula
Cumulative Markup
Pricing Strategies: Price Lining
Pricing Depends on 2 factors
16. The cost of merchandise that was sold (including the method that was used to determine cost)
Return on Net Worth (RONW) Formula
5 Steps of Retail Inventory Method
FIFO (First in - First out)
Cost of Goods Sold
17. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Expense Ratio Formula
Depreciation
Fixed Assets
Cost Complement 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.
Profit Margin Analysis Formula
Acid test or Quick Ratio
Promotion Errors
GMROII (Gross Margin Return on Inventory Investment)
19. 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
Depreciation
Cash Flow Formula
20. 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
The Cost Method
Selling Price Formula
Loss-Leader
Cumulative Markup
21. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Pricing Strategies: Price Ranges
Financial Leverage Ratio
Gross Margin
22. Liabilities+ Owner's equity or net worth
Current Assets
Assets Formula
Fixed Assets
Acid test or Quick Ratio
23. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Initial Markup (IMU)
Gross Margin
Fixed Liabilities
24. 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
FIFO (First in - First out)
Planned Initial Markup % Formula
Price Sensitivity
Off-Price Markdown Percentage Formula
25. 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
Profit
GMROII (Gross Margin Return on Inventory Investment)
Markdown optimization
Return on Assets
26. 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
Fixed Assets
Selling Price Formula
Markdown Percentage
27. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Gross Margin
Profit and Loss Statement (P&L Statement)
Return on Sales
Off-Price Markdowns
28. Can be transformed simply and rapidly into cash
Gross Margin
Dollar Markdown Formula
Retail Inventory Method
Current Assets
29. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Planned Initial Markup % Formula
Gross Margin
Original Price
Fixed Assets
30. 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: Price Zones
Return on Assets (ROA) Formul
Profit Margin Analysis Formula
Promotional Markdown
31. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Markup % of Cost Formula
Forced Obsolescence
Profit Margin
32. Original Retail price- markdown selling price
Net Profit
Dollar Markdown Formula
Forced Obsolescence
Markdown Cancellation ($) Formula
33. Current Assets/ Current Liabilities
Current Ratio (CR) Formula
Net Sales
Markup
Inventory
34. Dollar markup ($)/ retail price ($)
Pricing Strategies: Price Ranges
Late Markdowns
Profit Margin
Markup % of Retail Formula
35. Cost + Markup
FIFO (First in - First out)
Debt Equity Ratio Formula
Depreciation
Selling Price Formula
36. Sales for the period/ average inventory
Turnover Rate Formula
Markdown optimization
5 Steps of Retail Inventory Method
Depreciation
37. The energizing force that fuels and sustains our economic system
Markdown Cancellations
Pricing Strategies
Retail Price Formula
Profit
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
Depreciation
Pricing Strategies: Price Ranges
Assets Formula
39. (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%
Forced Obsolescence
Planned Initial Markup % Formula
Retail Inventory Method
Pricing Depends on 2 factors
40. 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
LIFO (last in - first out)
Expense Ratio
Markup % of Cost Formula
41. 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
Pricing Depends on 2 factors
Pricing Strategies: Price Ranges
Profit and Loss Statement (P&L Statement)
FIFO (First in - First out)
42. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Return on Net Worth
Markdown Cancellations
Markdown Optimization
Markdown Percentage
43. Buying errors - promotion errors - pricing errors - uncontrollable errors
Temporary Price Reduction
Reasons for taking Markdowns
Turnover Rate Formula
Promotion Errors
44. Total Expenses/ Net Sales
Pricing Strategies: Price Zones
Net Sales
Expense Ratio Formula
FIFO (First in - First out)
45. (gross margin % x Turnover) / (100%-markup %)
Expense Ratio
Gross Margin Return on Inventory Investment-GMROI Formula
Current Ratio
Markdown optimization
46. 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
Cost of Goods Sold (COGS) Formula
Markup
Pricing Errors
5 Steps of Retail Inventory Method
47. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Cost Complement Formula
Loss-Leader
Assets
48. 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
Sell-Through Rate
Turnover Rate Formula
Debt Equity Ratio
Current Ratio (CR) Formula
49. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Buying Errors
Return on Net Worth
Promotional Markdown
Cost of Goods Sold (COGS) Formula
50. 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
Return on Net Worth (RONW) Formula
LIFO (last in - first out)
FIFO (First in - First out)
Ideal Markdown