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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)
Current Liabilities
Price Sensitivity
Pricing Strategies: Price Zones
Adage of Profitability for Retailers
2. Sales less cost of goods sold
Gross Margin
Profit Margin Analysis Formula
Uncontrollable Errors
Net Profit
3. The energizing force that fuels and sustains our economic system
Profit
Acid test or Quick Ratio
Gross Margin Return on Inventory Investment-GMROI Formula
Financial Leverage Ratio Formula
4. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Markup % of Cost Formula
Cumulative Markup
Acid Test or Quick Ratio (QR) 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
Return on Assets (ROA) Formul
Markdown optimization
Financial Leverage Ratio
Debt Equity Ratio Formula
6. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Return on Net Worth (RONW) Formula
Financial Leverage Ratio Formula
Cost Complement Formula
Uncontrollable Errors
7. 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
Pricing Strategies
Debt Equity Ratio
Cash Flow Formula
Acid test or Quick Ratio
8. (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%
Pricing Depends on 2 factors
Cost of Goods Sold
Planned Initial Markup % Formula
Accounts Receivable (AR)
9. 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.
Dollar Markdown Formula
Buying Errors
Promotional Markdown
Balance Sheet
10. Net Profit After Taxes/ Net Worth
Reasons for taking Markdowns
Cost of Goods Sold (COGS) Formula
Return on Net Worth (RONW) Formula
Cumulative Markup % Formula
11. (Cash + Accounts Receivable) / Current Liabilities
Dollar Markdown Formula
Acid test or Quick Ratio
Pricing Strategies: Price Lining
Acid Test or Quick Ratio (QR) Formula
12. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Selling Price Formula
Pricing Strategies
Financial Leverage Ratio
13. Revenues received by a retailer
Return on Net Worth
Net Sales
Accounts Receivable (AR)
Off-Price Markdown Percentage Formula
14. Total Expenses/ Net Sales
Gross Margin
Markdown Percentage Formula
Expense Ratio Formula
Pricing Errors
15. Current Assets/ Current Liabilities
Return on Sales
Current Ratio (CR) Formula
Reasons for taking Markdowns
Acid Test or Quick Ratio (QR) Formula
16. Cash Received by the retailer-cash leaving the retailer
The Cost Method
Debt Equity Ratio Formula
GMROII (Gross Margin Return on Inventory Investment)
Cash Flow Formula
17. Having the right merchandise - at the right time - for the right price - in the right place
Profit Margin Analysis Formula
Adage of Profitability for Retailers
FIFO (First in - First out)
Return on Assets (ROA) Formul
18. Cost Price/ (100%-markup %)
Pricing Strategies: Price Lining
Return on Net Worth
Markdown
Retail Price Formula
19. Net dollar markdown/ net dollar selling price
Return on Net Worth (RONW) Formula
Cost of Goods Sold (COGS) Formula
Markdown Percentage Formula
Current Assets
20. Priced too high initially - priced too low - selling price of competitors
Assets
Debt Equity Ratio
Pricing Errors
Sell-Through Rate
21. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Forced Obsolescence
Cash Flow Formula
Retail Inventory Method
Cumulative Markup
22. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Financial Leverage Ratio Formula
Early Markdowns
Return on Net Worth (RONW) Formula
Initial Markup (IMU)
23. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Dollar Markdown Formula
Late Markdowns
FIFO (First in - First out)
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
Pricing Strategies
Retail Inventory Method
Price Sensitivity
Accounts Receivable (AR)
25. What the retailer owns in monetary value
Markdown optimization
Markdown Cancellation ($) Formula
FIFO (First in - First out)
Assets
26. 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.
Markup
Late Markdowns
Markdown Cancellations
Pricing Strategies: Price Ranges
27. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Current Liabilities
Cash Flow Formula
Markup % of Cost Formula
28. One that is just enough to move the goods
Return on Sales
Ideal Markdown
Reasons for taking Markdowns
Current Ratio (CR) Formula
29. 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
GMROII (Gross Margin Return on Inventory Investment)
Current Liabilities
Markup
Profit Margin
30. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Selling Price Formula
Price Sensitivity
Early Markdowns
Depreciation
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
Regular Price
Profit Margin
Fixed Assets
Profit and Loss Statement (P&L Statement)
32. Original Retail price- markdown selling price
Gross Margin Return on Inventory Investment-GMROI Formula
Dollar Markdown Formula
FIFO (First in - First out)
Retail Inventory Method
33. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Selling Price Formula
Pricing Strategies: Price Zones
Current Liabilities
Return on Net Worth
34. 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
Markup % of Retail Formula
The Cost Method
Early Markdowns
Debt Equity Ratio
35. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Late Markdowns
Early Markdowns
Regular Price
36. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Assets Formula
Return on Assets
Markdown
Cost Complement Formula
37. 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
Regular Price
5 Steps of Retail Inventory Method
Sell-Through Rate
Profit Margin
38. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
The Cost Method
Cumulative Markup
Retail Price Formula
Pricing Strategies: Price Ranges
39. Cost + Markup
Financial Leverage Ratio
Selling Price Formula
Temporary Price Reduction
Inventory
40. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Fixed Liabilities
Expense Ratio
The Cost Method
Pricing Strategies: Price Lining
41. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Planned Initial Markup % Formula
Ideal Markdown
Cost of Goods Sold (COGS) Formula
Inventory
42. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Fixed Liabilities
Liabilities
Ideal Markdown
GMROII (Gross Margin Return on Inventory Investment)
43. Net Profit After Taxes/ Total Assets
The Cost Method
Fixed Liabilities
Gross Margin Return on Inventory Investment-GMROI Formula
Return on Assets (ROA) Formul
44. 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
Temporary Price Reduction
Pricing Strategies: Price Ranges
Forced Obsolescence
FIFO (First in - First out)
45. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Reasons for taking Markdowns
Turnover Rate Formula
Loss-Leader
Markdown Optimization
46. (gross margin % x Turnover) / (100%-markup %)
Debt Equity Ratio Formula
Markdown Cancellations
Gross Margin Return on Inventory Investment-GMROI Formula
Initial Markup (IMU)
47. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Adage of Profitability for Retailers
Off-Price Markdowns
Return on Net Worth (RONW) Formula
Profit and Loss Statement (P&L Statement)
48. Can be transformed simply and rapidly into cash
Forced Obsolescence
Current Assets
Uncontrollable Errors
Debt Equity Ratio Formula
49. Improper displays - merchandise returns due to high pressure selling
Pricing Strategies: Price Ranges
Profit and Loss Statement (P&L Statement)
Promotion Errors
Profit Margin
50. Short time - like 1 or 2 day sales
Cost Complement Formula
Temporary Price Reduction
Net Profit
Retail Price Formula