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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. One that is just enough to move the goods
Profit Margin Analysis Formula
Ideal Markdown
Initial Markup (IMU)
Cost Complement Formula
2. 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
Return on Assets
Initial Markup (IMU)
5 Steps of Retail Inventory Method
3. Cost + Markup
Markdown optimization
Retail Price Formula
Selling Price Formula
Return on Net Worth (RONW) Formula
4. Current Assets/ Current Liabilities
Sell-Through Rate
Pricing Depends on 2 factors
Current Ratio (CR) Formula
Debt Equity Ratio
5. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Net Profit
Current Liabilities
Markdown
New Price
6. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Regular Price
GMROII (Gross Margin Return on Inventory Investment)
5 Steps of Retail Inventory Method
7. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Gross Margin
Profit and Loss Statement (P&L Statement)
Inventory
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
Expense Ratio Formula
Cash Flow Formula
Markdown optimization
Temporary Price Reduction
9. Promotional markdown that involves selling at or near cost for promotional purposes
Cash Flow Formula
Loss-Leader
Markup % of Retail Formula
Acid test or Quick Ratio
10. 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
Gross Margin
Pricing Strategies
LIFO (last in - first out)
FIFO (First in - First out)
11. Improper displays - merchandise returns due to high pressure selling
Cumulative Markup
Cumulative Markup % Formula
Expense Ratio Formula
Promotion Errors
12. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
New Price
Markdown Optimization
Retail Inventory Method
Dollar Markdown Formula
13. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Current Ratio (CR) Formula
Acid test or Quick Ratio
Profit Margin Analysis Formula
14. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Markdown Optimization
Pricing Errors
Fixed Assets
15. 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
Regular Price
LIFO (last in - first out)
FIFO (First in - First out)
Current Liabilities
16. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Current Assets
Return on Net Worth
Markdown Cancellations
Off-Price Markdown Percentage Formula
17. Short time - like 1 or 2 day sales
Adage of Profitability for Retailers
Temporary Price Reduction
GMROII (Gross Margin Return on Inventory Investment)
Clearance Markdowns
18. Total Expenses/ Net Sales
Operating Expenses
Expense Ratio Formula
Dollar Markdown Formula
Cumulative Markup
19. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Return on Assets (ROA) Formul
Early Markdowns
Cost Complement Formula
5 Steps of Retail Inventory Method
20. Original Retail price- markdown selling price
Dollar Markdown Formula
Financial Leverage Ratio Formula
Acid Test or Quick Ratio (QR) Formula
Retail Inventory Method
21. The prices from lowest to highest that are carried within a merchandise category
Assets
Acid Test or Quick Ratio (QR) Formula
Net Sales
Pricing Strategies: Price Ranges
22. Financial debts incurred by a retailer
Current Ratio (CR) Formula
Price Sensitivity
Early Markdowns
Liabilities
23. The cost of merchandise that was sold (including the method that was used to determine cost)
Profit Margin
Cost of Goods Sold
Inventory
Cumulative Markup % Formula
24. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Pricing Depends on 2 factors
Ideal Markdown
New Price
25. Costs involved in running the business
Financial Leverage Ratio
Late Markdowns
Gross Margin Return on Inventory Investment-GMROI Formula
Operating Expenses
26. Can be transformed simply and rapidly into cash
Current Liabilities
Current Assets
Loss-Leader
Operating Expenses
27. 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 Analysis Formula
Markdown Percentage Formula
Markdown Cancellation ($) Formula
Profit Margin
28. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Selling Price Formula
Early Markdowns
Expense Ratio Formula
Fixed Liabilities
29. 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.
Acid test or Quick Ratio
Markdown
Accounts Receivable (AR)
Pricing Errors
30. Total Markup on all goods on hand/ retail price of all goods on hand
Markdown
The Cost Method
Initial Markup (IMU)
Cumulative Markup % Formula
31. First price or Manufacturers suggestet Retal Price (MSRP)
Sell-Through Rate
Markup % of Cost Formula
Acid test or Quick Ratio
Original Price
32. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
Off-Price Markdowns
Adage of Profitability for Retailers
Return on Sales
33. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
5 Steps of Retail Inventory Method
Current Ratio (CR) Formula
Liabilities
34. What the retailer owns in monetary value
Temporary Price Reduction
Cash Flow Formula
Acid Test or Quick Ratio (QR) Formula
Assets
35. 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
Balance Sheet
5 Steps of Retail Inventory Method
Return on Net Worth (RONW) Formula
Reasons for taking Markdowns
36. 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
Retail Inventory Method
Pricing Strategies
Balance Sheet
37. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Retail Price Formula
Initial Markup (IMU)
Markdown Cancellation ($) Formula
FIFO (First in - First out)
38. Price Lining - price zones - price ranges
Markdown Percentage
Pricing Strategies
Markup % of Cost Formula
Clearance Markdowns
39. 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
Temporary Price Reduction
Cost Complement Formula
Sell-Through Rate
Gross Margin Return on Inventory Investment-GMROI Formula
40. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Pricing Errors
Depreciation
Clearance Markdowns
Pricing Strategies: Price Zones
41. Cash Received by the retailer-cash leaving the retailer
Profit Margin
Buying Errors
Cash Flow Formula
LIFO (last in - first out)
42. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
FIFO (First in - First out)
Cumulative Markup % Formula
Markdown Percentage Formula
43. Usually lower than original - but held for longer period
Sell-Through Rate
Return on Net Worth (RONW) Formula
Current Assets
Regular Price
44. Priced too high initially - priced too low - selling price of competitors
Expense Ratio
Pricing Errors
Clearance Markdowns
Pricing Strategies: Price Lining
45. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Markup % of Retail Formula
Early Markdowns
Buying Errors
Current Ratio
46. Total Assets/ Net Worth
LIFO (last in - first out)
Financial Leverage Ratio Formula
Accounts Receivable (AR)
Return on Sales
47. Sales for the period/ average inventory
Turnover Rate Formula
Selling Price Formula
Balance Sheet
Return on Net Worth
48. 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.
Acid test or Quick Ratio
Promotional Markdown
Markdown
Current Ratio
49. Net Profit/ Net Sales
Profit Margin Analysis Formula
Return on Assets
FIFO (First in - First out)
Net Profit
50. (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%
Planned Initial Markup % Formula
Retail Inventory Method
Net Sales
Current Ratio