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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. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Assets Formula
Off-Price Markdown Percentage Formula
FIFO (First in - First out)
Buying Errors
2. Usually lower than original - but held for longer period
Cost of Goods Sold
Pricing Strategies: Price Zones
Regular Price
Retail Inventory Method
3. 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
Assets
The Cost Method
Reasons for taking Markdowns
Planned Initial Markup % Formula
4. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Dollar Markdown Formula
Return on Assets
Loss-Leader
Forced Obsolescence
5. (Cash + Accounts Receivable) / Current Liabilities
Pricing Strategies: Price Ranges
Promotional Markdown
Acid Test or Quick Ratio (QR) Formula
Return on Net Worth (RONW) Formula
6. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
The Cost Method
Markup
Fixed Assets
Ideal Markdown
7. Sales less cost of goods sold
Gross Margin
Balance Sheet
Current Assets
Markdown Cancellation ($) Formula
8. Original Retail price- markdown selling price
Initial Markup (IMU)
Loss-Leader
Profit Margin
Dollar Markdown Formula
9. Ranges of prices that appeals for a particular group of consumers
Profit Margin Analysis Formula
Pricing Strategies: Price Zones
Cost Complement Formula
Liabilities
10. Net Profit After Taxes/ Total Assets
Markup % of Retail Formula
Inventory
Return on Assets (ROA) Formul
Price Sensitivity
11. The number of items remaining in stock x dollar markdown
Pricing Strategies: Price Lining
Current Assets
Cost Complement Formula
Markdown Cancellation ($) Formula
12. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Net Profit
Return on Sales
Financial Leverage Ratio
Markdown Optimization
13. The weather - merchandise is shopworn - economic downturn
Markdown Cancellations
Cumulative Markup % Formula
Uncontrollable Errors
Cash Flow Formula
14. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Debt Equity Ratio
Return on Assets
Pricing Strategies: Price Ranges
Markdown Percentage
15. Total Markup on all goods on hand/ retail price of all goods on hand
Gross Margin
Markdown Optimization
Debt Equity Ratio
Cumulative Markup % Formula
16. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Markdown Percentage Formula
Current Assets
Cumulative Markup
17. Dollar markup ($)/ cost price ($)
Off-Price Markdowns
Return on Assets
Markup % of Cost Formula
Inventory
18. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Markdown Cancellations
Return on Assets (ROA) Formul
Current Liabilities
19. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Off-Price Markdowns
Markdown optimization
Profit
Price Sensitivity
20. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Operating Expenses
Return on Net Worth
The Cost Method
Markdown Cancellations
21. (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%
Net Sales
Planned Initial Markup % Formula
New Price
Markup
22. 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
Cumulative Markup
Cost Complement Formula
5 Steps of Retail Inventory Method
Inventory
23. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Gross Margin Return on Inventory Investment-GMROI Formula
Off-Price Markdowns
Markdown Optimization
Selling Price Formula
24. 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
Markdown optimization
Depreciation
FIFO (First in - First out)
Fixed Assets
25. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
New Price
Off-Price Markdowns
Pricing Strategies: Price Lining
Markup % of Retail Formula
26. 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
Price Sensitivity
Dollar Markdown Formula
Markdown Cancellation ($) Formula
LIFO (last in - first out)
27. Cash Received by the retailer-cash leaving the retailer
Markup % of Retail Formula
Cost of Goods Sold
Cash Flow Formula
Gross Margin
28. 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
Debt Equity Ratio
5 Steps of Retail Inventory Method
Price Sensitivity
Fixed Liabilities
29. Sales for the period/ average inventory
Cost of Goods Sold
Turnover Rate Formula
Return on Assets
Cumulative Markup
30. Net Profit After Taxes/ Net Worth
Net Profit
Pricing Strategies: Price Lining
Current Ratio (CR) Formula
Return on Net Worth (RONW) Formula
31. Revenues received by a retailer
Promotion Errors
Gross Margin Return on Inventory Investment-GMROI Formula
Net Sales
LIFO (last in - first out)
32. Cost Price/ (100%-markup %)
Cost of Goods Sold
Cumulative Markup % Formula
Retail Inventory Method
Retail Price Formula
33. The retailers financial condition at a specific point in time
Markdown Optimization
Initial Markup (IMU)
Profit Margin
Balance Sheet
34. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
GMROII (Gross Margin Return on Inventory Investment)
Pricing Depends on 2 factors
Selling Price Formula
Temporary Price Reduction
35. 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.
Expense Ratio
Initial Markup (IMU)
Markup
Markdown optimization
36. Price Lining - price zones - price ranges
Pricing Strategies
Profit
Selling Price Formula
Loss-Leader
37. 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.
Promotional Markdown
Assets
Ideal Markdown
Current Ratio (CR) Formula
38. 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
GMROII (Gross Margin Return on Inventory Investment)
5 Steps of Retail Inventory Method
Current Liabilities
Loss-Leader
39. Liabilities+ Owner's equity or net worth
Cost of Goods Sold (COGS) Formula
Cumulative Markup % Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Assets Formula
40. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Expense Ratio Formula
Temporary Price Reduction
Assets
Cost of Goods Sold (COGS) Formula
41. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Pricing Strategies: Price Lining
Clearance Markdowns
Assets
42. 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.
Accounts Receivable (AR)
Markup % of Retail Formula
Pricing Strategies: Price Ranges
Profit
43. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Cumulative Markup % Formula
Adage of Profitability for Retailers
Fixed Liabilities
Profit Margin
44. Promotional markdown that involves selling at or near cost for promotional purposes
Loss-Leader
Inventory
Temporary Price Reduction
Expense Ratio Formula
45. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Assets
Acid test or Quick Ratio
Sell-Through Rate
Markdown
46. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Pricing Strategies: Price Zones
Cumulative Markup
Return on Net Worth (RONW) Formula
Markdown
47. One that is just enough to move the goods
Ideal Markdown
Reasons for taking Markdowns
Profit and Loss Statement (P&L Statement)
Markup % of Retail Formula
48. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Clearance Markdowns
Off-Price Markdowns
Fixed Assets
49. 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
Retail Price Formula
Debt Equity Ratio
Current Liabilities
Debt Equity Ratio Formula
50. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Cost of Goods Sold (COGS) Formula
Depreciation
Markup
Temporary Price Reduction