Test your basic knowledge |

Retail Financials

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. The number of items remaining in stock x dollar markdown






2. 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






3. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.






4. 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






5. 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






6. Costs involved in running the business






7. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)






8. 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






9. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down






10. Net Profit/ Net Sales






11. Can be transformed simply and rapidly into cash






12. Net dollar markdown/ net dollar selling price






13. 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.






14. 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.






15. Net Profit After Taxes/ Total Assets






16. Having the right merchandise - at the right time - for the right price - in the right place






17. Original Retail price- markdown selling price






18. Sales for the period/ average inventory






19. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.






20. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.






21. Liabilities+ Owner's equity or net worth






22. 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






23. First price or Manufacturers suggestet Retal Price (MSRP)






24. Total Markup on all goods on hand/ retail price of all goods on hand






25. The retailers financial condition at a specific point in time






26. 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.






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






28. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented






29. Total Expenses/ Net Sales






30. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes






31. Sales less cost of goods sold






32. Dollar markup ($)/ retail price ($)






33. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.






34. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise






35. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model






36. 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






37. 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






38. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)






39. 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






40. 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.






41. 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.






42. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit






43. Usually lower than original - but held for longer period






44. Buying errors - promotion errors - pricing errors - uncontrollable errors






45. Short time - like 1 or 2 day sales






46. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.






47. 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.






48. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)






49. Improper displays - merchandise returns due to high pressure selling






50. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.