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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. Improper displays - merchandise returns due to high pressure selling
Uncontrollable Errors
Promotion Errors
Late Markdowns
Current Ratio (CR) Formula
2. Total Markup on all goods on hand/ retail price of all goods on hand
Pricing Strategies: Price Ranges
Cumulative Markup % Formula
Return on Net Worth (RONW) Formula
Buying Errors
3. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Planned Initial Markup % Formula
Operating Expenses
Return on Sales
4. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Reasons for taking Markdowns
Markdown optimization
Net Sales
5. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Late Markdowns
Sell-Through Rate
Initial Markup (IMU)
Net Profit
6. 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.
Markup
Assets Formula
Return on Net Worth
New Price
7. The energizing force that fuels and sustains our economic system
LIFO (last in - first out)
Profit
Gross Margin Return on Inventory Investment-GMROI Formula
Inventory
8. Cost Price/ (100%-markup %)
Cost of Goods Sold (COGS) Formula
Loss-Leader
Retail Price Formula
Promotion Errors
9. Total Expenses/ Net Sales
Expense Ratio Formula
Gross Margin Return on Inventory Investment-GMROI Formula
5 Steps of Retail Inventory Method
Pricing Depends on 2 factors
10. 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
Liabilities
Current Ratio
GMROII (Gross Margin Return on Inventory Investment)
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.
Pricing Strategies: Price Ranges
Gross Margin
Late Markdowns
Accounts Receivable (AR)
12. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Operating Expenses
Current Ratio (CR) Formula
Return on Net Worth (RONW) Formula
Return on Assets
13. 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
Initial Markup (IMU)
Pricing Depends on 2 factors
Net Sales
14. 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
Loss-Leader
Markdown optimization
Promotional Markdown
5 Steps of Retail Inventory Method
15. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Accounts Receivable (AR)
Pricing Strategies: Price Ranges
Current Ratio (CR) Formula
16. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Promotion Errors
Net Sales
Net Profit
Retail Price Formula
17. 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
FIFO (First in - First out)
Debt Equity Ratio Formula
Cumulative Markup
Acid Test or Quick Ratio (QR) Formula
18. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Return on Net Worth
Return on Net Worth (RONW) Formula
Sell-Through Rate
Adage of Profitability for Retailers
19. Net Profit After Taxes/ Net Worth
Return on Net Worth
Pricing Strategies: Price Ranges
Markdown Optimization
Return on Net Worth (RONW) Formula
20. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Turnover Rate Formula
Cost Complement Formula
Early Markdowns
Uncontrollable Errors
21. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Reasons for taking Markdowns
Depreciation
Return on Assets
Markdown Percentage
22. 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
Forced Obsolescence
Early Markdowns
Balance Sheet
23. 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.
Buying Errors
Acid test or Quick Ratio
Pricing Strategies: Price Zones
Dollar Markdown Formula
24. Sales for the period/ average inventory
Turnover Rate Formula
Pricing Strategies: Price Zones
Ideal Markdown
Retail Inventory Method
25. (Cash + Accounts Receivable) / Current Liabilities
Gross Margin
Acid Test or Quick Ratio (QR) Formula
Return on Assets (ROA) Formul
Planned Initial Markup % Formula
26. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Pricing Strategies
Current Liabilities
Profit Margin Analysis Formula
27. 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
Late Markdowns
Cumulative Markup
Markup % of Retail Formula
28. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Cost of Goods Sold
Loss-Leader
Forced Obsolescence
Net Sales
29. 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.
Pricing Strategies: Price Lining
Markdown Optimization
Cumulative Markup
Expense Ratio
30. The prices from lowest to highest that are carried within a merchandise category
Fixed Liabilities
Pricing Strategies: Price Ranges
Acid test or Quick Ratio
New Price
31. Costs involved in running the business
Operating Expenses
Forced Obsolescence
Markdown Cancellation ($) Formula
Return on Net Worth (RONW) Formula
32. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Loss-Leader
Assets
Pricing Depends on 2 factors
Buying Errors
33. Having the right merchandise - at the right time - for the right price - in the right place
Markup % of Cost Formula
Buying Errors
Price Sensitivity
Adage of Profitability for Retailers
34. Can be transformed simply and rapidly into cash
Net Profit
Current Assets
Cost Complement Formula
The Cost Method
35. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Off-Price Markdown Percentage Formula
Original Price
Liabilities
Pricing Depends on 2 factors
36. Evaluates the managament of capital
Return on Sales
Markdown Percentage Formula
Cumulative Markup % Formula
Markup % of Cost Formula
37. Short time - like 1 or 2 day sales
Cumulative Markup
Temporary Price Reduction
Accounts Receivable (AR)
Return on Net Worth (RONW) Formula
38. What the retailer owns in monetary value
Liabilities
Assets
Cost Complement Formula
Expense Ratio
39. One that is just enough to move the goods
Off-Price Markdown Percentage Formula
Ideal Markdown
Promotion Errors
Financial Leverage Ratio
40. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Early Markdowns
Markdown Percentage
Markdown optimization
41. Net Profit After Taxes/ Total Assets
Price Sensitivity
Acid test or Quick Ratio
Sell-Through Rate
Return on Assets (ROA) Formul
42. Original Retail price- markdown selling price
Forced Obsolescence
The Cost Method
Dollar Markdown Formula
Clearance Markdowns
43. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Return on Net Worth (RONW) Formula
Cumulative Markup
Profit Margin Analysis Formula
44. Price is changed (up or down)
New Price
Markup % of Retail Formula
Assets Formula
Net Profit
45. Current Assets/ Current Liabilities
Current Ratio (CR) Formula
Late Markdowns
Sell-Through Rate
Clearance Markdowns
46. Cost + Markup
Expense Ratio
Cost Complement Formula
Markdown Optimization
Selling Price Formula
47. Usually lower than original - but held for longer period
Net Sales
FIFO (First in - First out)
Regular Price
Initial Markup (IMU)
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
Inventory
Markup % of Cost Formula
Price Sensitivity
Cost of Goods Sold (COGS) Formula
49. Revenues received by a retailer
Current Assets
Current Ratio
Net Sales
Gross Margin Return on Inventory Investment-GMROI Formula
50. Sales less cost of goods sold
Gross Margin
Liabilities
Uncontrollable Errors
Net Profit