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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. Sales less cost of goods sold
Profit and Loss Statement (P&L Statement)
5 Steps of Retail Inventory Method
Gross Margin
Markdown Optimization
2. Improper displays - merchandise returns due to high pressure selling
Return on Assets
Assets
Retail Inventory Method
Promotion Errors
3. Price Lining - price zones - price ranges
Markup % of Cost Formula
Current Liabilities
Markdown
Pricing Strategies
4. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Markup % of Cost Formula
GMROII (Gross Margin Return on Inventory Investment)
Temporary Price Reduction
5. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Cumulative Markup % Formula
Off-Price Markdown Percentage Formula
Initial Markup (IMU)
5 Steps of Retail Inventory Method
6. 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
Financial Leverage Ratio Formula
Regular Price
Depreciation
GMROII (Gross Margin Return on Inventory Investment)
7. Cost Price/ (100%-markup %)
Early Markdowns
New Price
Pricing Strategies: Price Lining
Retail Price Formula
8. Having the right merchandise - at the right time - for the right price - in the right place
Adage of Profitability for Retailers
Cumulative Markup % Formula
Net Profit
Gross Margin Return on Inventory Investment-GMROI Formula
9. Evaluates the managament of capital
Return on Sales
Assets Formula
Expense Ratio
Cost of Goods Sold (COGS) Formula
10. Net Profit After Taxes/ Net Worth
Current Assets
Return on Net Worth (RONW) Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Cost of Goods Sold (COGS) Formula
11. 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
The Cost Method
Price Sensitivity
Inventory
Return on Net Worth
12. 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.
Expense Ratio
Liabilities
Loss-Leader
Initial Markup (IMU)
13. 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.
Gross Margin
Initial Markup (IMU)
Promotional Markdown
Off-Price Markdowns
14. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Return on Assets (ROA) Formul
Return on Assets
Pricing Errors
Markdown Percentage
15. 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
Acid Test or Quick Ratio (QR) Formula
16. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
LIFO (last in - first out)
Cost Complement Formula
Adage of Profitability for Retailers
17. 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
Markup
Cash Flow Formula
Retail Price Formula
18. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Retail Price Formula
Cost Complement Formula
Acid Test or Quick Ratio (QR) Formula
Profit Margin
19. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Current Ratio
Ideal Markdown
Inventory
20. The cost of merchandise that was sold (including the method that was used to determine cost)
Clearance Markdowns
Debt Equity Ratio Formula
Uncontrollable Errors
Cost of Goods Sold
21. (gross margin % x Turnover) / (100%-markup %)
Balance Sheet
Markdown optimization
Pricing Strategies: Price Zones
Gross Margin Return on Inventory Investment-GMROI Formula
22. 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
Cost Complement Formula
Retail Price Formula
Current Ratio
Financial Leverage Ratio Formula
23. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Profit Margin Analysis Formula
Markdown
Current Ratio (CR) Formula
Off-Price Markdowns
24. Can be transformed simply and rapidly into cash
Depreciation
Current Assets
Fixed Assets
5 Steps of Retail Inventory Method
25. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
Loss-Leader
Liabilities
Initial Markup (IMU)
26. Cost + Markup
Debt Equity Ratio Formula
Pricing Depends on 2 factors
Sell-Through Rate
Selling Price Formula
27. What the retailer owns in monetary value
Assets
Markdown optimization
Markdown Cancellation ($) Formula
5 Steps of Retail Inventory Method
28. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Balance Sheet
Retail Inventory Method
Return on Net Worth
29. Current Liabilites/ Net Worth
Loss-Leader
Expense Ratio
Retail Price Formula
Debt Equity Ratio Formula
30. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Pricing Strategies: Price Zones
Current Liabilities
Depreciation
Return on Net Worth
31. Revenues received by a retailer
Expense Ratio
Assets Formula
Net Sales
Financial Leverage Ratio Formula
32. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Sell-Through Rate
Profit
Price Sensitivity
Fixed Assets
33. Total Assets/ Net Worth
Fixed Liabilities
Financial Leverage Ratio Formula
Return on Net Worth
Gross Margin
34. 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)
Forced Obsolescence
Cost Complement Formula
Pricing Strategies
35. Total Expenses/ Net Sales
Markdown Percentage
Expense Ratio Formula
Dollar Markdown Formula
Buying Errors
36. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Debt Equity Ratio
Current Ratio (CR) Formula
Markdown Optimization
Return on Net Worth
37. Current Assets/ Current Liabilities
Return on Net Worth (RONW) Formula
Current Ratio (CR) Formula
Late Markdowns
Loss-Leader
38. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Cost Complement Formula
Profit Margin Analysis Formula
Fixed Liabilities
Planned Initial Markup % Formula
39. 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.
Retail Inventory Method
Markup
Gross Margin
Debt Equity Ratio
40. 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
Original Price
Debt Equity Ratio
Regular Price
Debt Equity Ratio Formula
41. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Fixed Liabilities
Pricing Strategies: Price Lining
Adage of Profitability for Retailers
The Cost Method
42. One that is just enough to move the goods
Adage of Profitability for Retailers
Late Markdowns
Markdown Cancellations
Ideal Markdown
43. Costs involved in running the business
Operating Expenses
Pricing Strategies: Price Lining
Dollar Markdown Formula
Buying Errors
44. First price or Manufacturers suggestet Retal Price (MSRP)
GMROII (Gross Margin Return on Inventory Investment)
Original Price
Return on Sales
Liabilities
45. Dollar markup ($)/ retail price ($)
Off-Price Markdowns
Markup % of Retail Formula
Fixed Liabilities
Inventory
46. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Gross Margin
Net Profit
Financial Leverage Ratio Formula
Pricing Strategies: Price Zones
47. 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
Forced Obsolescence
Cumulative Markup
Cumulative Markup % Formula
Sell-Through Rate
48. (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%
GMROII (Gross Margin Return on Inventory Investment)
Planned Initial Markup % Formula
Assets
Profit Margin Analysis Formula
49. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Debt Equity Ratio
Cost Complement Formula
Off-Price Markdown Percentage Formula
50. 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
Profit Margin
Markup % of Retail Formula
Clearance Markdowns
Late Markdowns