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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)
Gross Margin
Markup % of Retail Formula
Current Liabilities
Depreciation
2. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Profit Margin
Reasons for taking Markdowns
Early Markdowns
3. (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%
Profit
Return on Net Worth (RONW) Formula
Planned Initial Markup % Formula
Early Markdowns
4. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Off-Price Markdowns
Profit Margin Analysis Formula
Pricing Strategies: Price Ranges
Initial Markup (IMU)
5. The prices from lowest to highest that are carried within a merchandise category
Ideal Markdown
Pricing Strategies: Price Ranges
Planned Initial Markup % Formula
Pricing Strategies
6. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Retail Price Formula
Selling Price Formula
Forced Obsolescence
7. The cost of merchandise that was sold (including the method that was used to determine cost)
Cost of Goods Sold
Markdown Percentage Formula
Pricing Depends on 2 factors
Pricing Strategies: Price Zones
8. Short time - like 1 or 2 day sales
Temporary Price Reduction
Planned Initial Markup % Formula
Promotion Errors
Operating Expenses
9. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Financial Leverage Ratio
Markdown Cancellations
Reasons for taking Markdowns
Markup % of Retail Formula
10. 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.
Cumulative Markup
Expense Ratio
Pricing Strategies: Price Zones
Retail Inventory Method
11. 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.
Current Ratio (CR) Formula
Initial Markup (IMU)
Late Markdowns
Price Sensitivity
12. The energizing force that fuels and sustains our economic system
Profit
Pricing Strategies: Price Zones
Temporary Price Reduction
Markdown Cancellations
13. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
FIFO (First in - First out)
Off-Price Markdowns
Retail Price Formula
14. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Markup % of Retail Formula
Debt Equity Ratio Formula
Assets Formula
15. Total Assets/ Net Worth
Price Sensitivity
Financial Leverage Ratio Formula
Cumulative Markup % Formula
Pricing Strategies: Price Zones
16. Price is changed (up or down)
Markdown Cancellation ($) Formula
Off-Price Markdown Percentage Formula
New Price
Financial Leverage Ratio Formula
17. Ensures that there is enough cash to pay debts. Any time the ratio is colse to 1 - the retailer is said to be in a liquid position.
Profit and Loss Statement (P&L Statement)
Acid test or Quick Ratio
Late Markdowns
Markdown Cancellations
18. Having the right merchandise - at the right time - for the right price - in the right place
LIFO (last in - first out)
Adage of Profitability for Retailers
Markup % of Retail Formula
Profit Margin
19. Examines the financial health of a retailer - as one of the best indicators of having too much debt in relationship to net worth. Comparres the money that vendors or banks are risking with the money that the retail owners have invested in their opera
Debt Equity Ratio
New Price
Expense Ratio Formula
Off-Price Markdown Percentage Formula
20. Current Assets/ Current Liabilities
Return on Net Worth
Retail Price Formula
Current Ratio (CR) Formula
Ideal Markdown
21. The higher the ratio the quicker current liabilities can be paid. This ratio also indicates the margin of safety a retailer has on hand to cover possible shrinkages
Markdown Cancellation ($) Formula
Debt Equity Ratio Formula
Current Ratio
Regular Price
22. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Markdown Cancellations
Regular Price
Pricing Strategies: Price Lining
23. Sales for the period/ average inventory
Planned Initial Markup % Formula
Markup
Acid test or Quick Ratio
Turnover Rate Formula
24. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Off-Price Markdown Percentage Formula
Fixed Liabilities
Loss-Leader
Net Profit
25. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Markdown Optimization
Accounts Receivable (AR)
Return on Net Worth
Selling Price Formula
26. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Forced Obsolescence
Current Ratio
Pricing Strategies: Price Ranges
27. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Markdown
Uncontrollable Errors
Off-Price Markdown Percentage Formula
Return on Assets (ROA) Formul
28. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Profit and Loss Statement (P&L Statement)
Cost of Goods Sold (COGS) Formula
Retail Inventory Method
Accounts Receivable (AR)
29. What the retailer owns in monetary value
Selling Price Formula
Assets
Return on Net Worth
Cumulative Markup % Formula
30. Liabilities+ Owner's equity or net worth
Expense Ratio Formula
Assets Formula
Temporary Price Reduction
Markdown
31. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Profit and Loss Statement (P&L Statement)
Cumulative Markup
Sell-Through Rate
FIFO (First in - First out)
32. Price Lining - price zones - price ranges
Debt Equity Ratio Formula
Debt Equity Ratio
Early Markdowns
Pricing Strategies
33. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Original Price
Cumulative Markup
Debt Equity Ratio
Selling Price Formula
34. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Operating Expenses
Selling Price Formula
Markdown Cancellation ($) Formula
Financial Leverage Ratio
35. Net Profit/ Net Sales
Profit Margin Analysis Formula
Return on Sales
Markdown Percentage Formula
Original Price
36. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Retail Inventory Method
Markdown Cancellation ($) Formula
Expense Ratio
Accounts Receivable (AR)
37. The number of items remaining in stock x dollar markdown
Pricing Strategies: Price Zones
Accounts Receivable (AR)
Planned Initial Markup % Formula
Markdown Cancellation ($) Formula
38. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Financial Leverage Ratio Formula
Acid Test or Quick Ratio (QR) Formula
Forced Obsolescence
Fixed Assets
39. Original Retail price- markdown selling price
Assets
Planned Initial Markup % Formula
Financial Leverage Ratio Formula
Dollar Markdown Formula
40. Sales less cost of goods sold
Gross Margin
Cost of Goods Sold (COGS) Formula
Financial Leverage Ratio Formula
Markup % of Retail Formula
41. Ranges of prices that appeals for a particular group of consumers
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Strategies: Price Zones
Debt Equity Ratio Formula
Early Markdowns
42. Net Profit After Taxes/ Total Assets
Balance Sheet
Net Sales
Forced Obsolescence
Return on Assets (ROA) Formul
43. Dollar markup ($)/ cost price ($)
Promotional Markdown
Promotion Errors
Markup % of Cost Formula
Markdown Cancellation ($) Formula
44. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Promotional Markdown
Return on Net Worth (RONW) Formula
Profit and Loss Statement (P&L Statement)
Markdown Percentage
45. First price or Manufacturers suggestet Retal Price (MSRP)
Current Liabilities
Markup % of Retail Formula
Original Price
Return on Net Worth
46. Total Expenses/ Net Sales
Fixed Liabilities
Profit and Loss Statement (P&L Statement)
Ideal Markdown
Expense Ratio Formula
47. 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)
Expense Ratio Formula
Fixed Liabilities
LIFO (last in - first out)
48. Dollar markup ($)/ retail price ($)
Current Liabilities
Markup % of Retail Formula
Ideal Markdown
Cumulative Markup % Formula
49. The retailers financial condition at a specific point in time
New Price
Pricing Depends on 2 factors
Cash Flow Formula
Balance Sheet
50. 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
Net Sales
Profit Margin
Retail Inventory Method
New Price