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Test your basic knowledge |
Retail Financials
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Study First
Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Gross Margin
5 Steps of Retail Inventory Method
Dollar Markdown Formula
2. 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
Return on Sales
The Cost Method
Financial Leverage Ratio Formula
Cash Flow Formula
3. The cost of merchandise that was sold (including the method that was used to determine cost)
Off-Price Markdown Percentage Formula
Operating Expenses
Profit Margin
Cost of Goods Sold
4. Sales for the period/ average inventory
Current Assets
Adage of Profitability for Retailers
Loss-Leader
Turnover Rate Formula
5. 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 Percentage
Debt Equity Ratio Formula
Markdown optimization
Expense Ratio
6. The retailers financial condition at a specific point in time
Gross Margin
Balance Sheet
Forced Obsolescence
Return on Assets (ROA) Formul
7. Total Markup on all goods on hand/ retail price of all goods on hand
Markdown Percentage Formula
Cumulative Markup % Formula
Sell-Through Rate
Selling Price Formula
8. 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
Price Sensitivity
Debt Equity Ratio
Promotional Markdown
FIFO (First in - First out)
9. 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.
Inventory
Pricing Strategies: Price Zones
Accounts Receivable (AR)
Current Ratio (CR) Formula
10. Buying errors - promotion errors - pricing errors - uncontrollable errors
Acid test or Quick Ratio
Late Markdowns
Financial Leverage Ratio
Reasons for taking Markdowns
11. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Debt Equity Ratio Formula
Temporary Price Reduction
Markdown
Clearance Markdowns
12. 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
Acid test or Quick Ratio
Temporary Price Reduction
Return on Assets (ROA) Formul
13. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Financial Leverage Ratio
Gross Margin Return on Inventory Investment-GMROI Formula
Off-Price Markdowns
Planned Initial Markup % Formula
14. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
Fixed Liabilities
Gross Margin
Pricing Depends on 2 factors
15. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Cost Complement Formula
Balance Sheet
Pricing Errors
Current Liabilities
16. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Financial Leverage Ratio Formula
Cost of Goods Sold (COGS) Formula
Reasons for taking Markdowns
Markdown Cancellations
17. 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
Retail Inventory Method
Profit
Late Markdowns
18. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Original Price
Clearance Markdowns
Operating Expenses
19. 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
Fixed Assets
Return on Sales
Sell-Through Rate
20. Net Profit After Taxes/ Total Assets
Clearance Markdowns
Markup
Return on Assets (ROA) Formul
Net Profit
21. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Markdown Percentage
GMROII (Gross Margin Return on Inventory Investment)
Pricing Strategies: Price Lining
Uncontrollable Errors
22. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Cumulative Markup
Early Markdowns
Depreciation
Profit
23. (gross margin % x Turnover) / (100%-markup %)
Sell-Through Rate
Gross Margin Return on Inventory Investment-GMROI Formula
Planned Initial Markup % Formula
Buying Errors
24. 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
Promotional Markdown
Markup
Financial Leverage Ratio Formula
25. Cash Received by the retailer-cash leaving the retailer
Promotion Errors
Initial Markup (IMU)
Cash Flow Formula
Dollar Markdown Formula
26. Ranges of prices that appeals for a particular group of consumers
Cash Flow Formula
Retail Price Formula
Financial Leverage Ratio Formula
Pricing Strategies: Price Zones
27. Net Profit/ Net Sales
Return on Assets (ROA) Formul
Profit Margin Analysis Formula
Turnover Rate Formula
Off-Price Markdown Percentage Formula
28. The number of items remaining in stock x dollar markdown
Debt Equity Ratio Formula
Temporary Price Reduction
Markdown Cancellation ($) Formula
Depreciation
29. Liabilities+ Owner's equity or net worth
Assets Formula
Current Liabilities
Return on Assets
Current Ratio (CR) Formula
30. Original Retail price- markdown selling price
Current Liabilities
Dollar Markdown Formula
Off-Price Markdown Percentage Formula
Financial Leverage Ratio Formula
31. 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
Buying Errors
FIFO (First in - First out)
Markup % of Retail Formula
Operating Expenses
32. Price is changed (up or down)
Sell-Through Rate
Clearance Markdowns
Markdown
New Price
33. Financial debts incurred by a retailer
Original Price
Liabilities
Promotion Errors
Markup % of Cost Formula
34. 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
Profit Margin
The Cost Method
Pricing Strategies: Price Ranges
35. The energizing force that fuels and sustains our economic system
Profit
Cost Complement Formula
Expense Ratio
Markdown optimization
36. Cost + Markup
Selling Price Formula
Acid Test or Quick Ratio (QR) Formula
Pricing Depends on 2 factors
Return on Net Worth (RONW) Formula
37. Current Assets/ Current Liabilities
Temporary Price Reduction
Cost Complement Formula
Assets Formula
Current Ratio (CR) Formula
38. Cost Price/ (100%-markup %)
Pricing Depends on 2 factors
Retail Price Formula
Pricing Strategies: Price Ranges
Depreciation
39. 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.
Expense Ratio
Current Assets
Return on Net Worth
Retail Inventory Method
40. Promotional markdown that involves selling at or near cost for promotional purposes
Debt Equity Ratio Formula
Loss-Leader
Markdown Cancellation ($) Formula
Late Markdowns
41. One that is just enough to move the goods
Gross Margin
Profit Margin Analysis Formula
Ideal Markdown
Profit
42. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Return on Net Worth (RONW) Formula
Price Sensitivity
Markdown Cancellations
Inventory
43. Dollar markup ($)/ cost price ($)
Price Sensitivity
Profit
Markup % of Cost Formula
LIFO (last in - first out)
44. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Debt Equity Ratio Formula
Fixed Liabilities
Return on Assets
Dollar Markdown Formula
45. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Retail Inventory Method
5 Steps of Retail Inventory Method
Forced Obsolescence
Assets Formula
46. Revenues received by a retailer
Pricing Depends on 2 factors
Current Ratio
Net Sales
Late Markdowns
47. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Planned Initial Markup % Formula
Cumulative Markup
Pricing Errors
Balance Sheet
48. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Planned Initial Markup % Formula
Markdown Percentage Formula
Temporary Price Reduction
Fixed Assets
49. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Net Sales
New Price
Buying Errors
Financial Leverage Ratio Formula
50. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Uncontrollable Errors
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Strategies
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