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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. Current Liabilites/ Net Worth
Markdown
Pricing Depends on 2 factors
5 Steps of Retail Inventory Method
Debt Equity Ratio Formula
2. Ranges of prices that appeals for a particular group of consumers
Markdown Cancellation ($) Formula
Pricing Strategies: Price Zones
Acid Test or Quick Ratio (QR) Formula
Expense Ratio
3. Inventory Valuation Method where the cost to the retailer of each item purchased from a vendor is entered in the accounting system and/or placed on the merchandise item or on it's package. At times - freight charges are built into the cost. Coding of
The Cost Method
Off-Price Markdowns
Depreciation
Cumulative Markup
4. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Gross Margin Return on Inventory Investment-GMROI Formula
Inventory
Liabilities
Profit and Loss Statement (P&L Statement)
5. Net Profit/ Net Sales
Off-Price Markdowns
Profit Margin Analysis Formula
Gross Margin
Debt Equity Ratio
6. Net dollar markdown/ net dollar selling price
Inventory
Pricing Strategies: Price Ranges
Cost of Goods Sold (COGS) Formula
Markdown Percentage Formula
7. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Current Ratio (CR) Formula
Gross Margin
Uncontrollable Errors
8. Priced too high initially - priced too low - selling price of competitors
Net Profit
Net Sales
5 Steps of Retail Inventory Method
Pricing Errors
9. Price Lining - price zones - price ranges
Pricing Strategies
Initial Markup (IMU)
Return on Net Worth
Accounts Receivable (AR)
10. What the retailer owns in monetary value
Loss-Leader
Return on Assets
Markdown Cancellation ($) Formula
Assets
11. Net Profit After Taxes/ Net Worth
FIFO (First in - First out)
Return on Net Worth (RONW) Formula
Inventory
Markup % of Retail Formula
12. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Markup
Return on Sales
Current Ratio
Forced Obsolescence
13. Current Assets/ Current Liabilities
Loss-Leader
New Price
Current Ratio (CR) Formula
Markup
14. 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 Price Formula
Clearance Markdowns
Cost of Goods Sold
Markup
15. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Pricing Strategies
Debt Equity Ratio Formula
Markdown Percentage
Off-Price Markdowns
16. Cash Received by the retailer-cash leaving the retailer
Profit Margin Analysis Formula
The Cost Method
Cash Flow Formula
Markdown Percentage Formula
17. 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.
Operating Expenses
Off-Price Markdown Percentage Formula
Acid test or Quick Ratio
Pricing Errors
18. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Operating Expenses
Markdown Cancellations
Markdown Percentage
Pricing Strategies: Price Ranges
19. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Markdown Percentage Formula
Cumulative Markup % Formula
Return on Sales
Financial Leverage Ratio
20. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
The Cost Method
Depreciation
Return on Assets
Forced Obsolescence
21. 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
Assets
Loss-Leader
Profit Margin
5 Steps of Retail Inventory Method
22. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Promotion Errors
Current Liabilities
Accounts Receivable (AR)
Balance Sheet
23. Cost + Markup
FIFO (First in - First out)
Assets Formula
Pricing Strategies: Price Ranges
Selling Price Formula
24. The energizing force that fuels and sustains our economic system
Cumulative Markup % Formula
Assets Formula
Profit
Price Sensitivity
25. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Original Price
Profit Margin
Promotion Errors
26. Can be transformed simply and rapidly into cash
Current Assets
Cost of Goods Sold
Cumulative Markup % Formula
New Price
27. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Return on Assets (ROA) Formul
Markup % of Retail Formula
Markdown Percentage
28. One that is just enough to move the goods
Return on Assets (ROA) Formul
Temporary Price Reduction
Ideal Markdown
Forced Obsolescence
29. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Forced Obsolescence
Markdown optimization
Acid Test or Quick Ratio (QR) Formula
30. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Markdown Optimization
Return on Sales
Expense Ratio
31. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Profit
Fixed Liabilities
Balance Sheet
32. 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
Clearance Markdowns
Retail Price Formula
Return on Assets (ROA) Formul
Cost of Goods Sold (COGS) Formula
33. Short time - like 1 or 2 day sales
Promotional Markdown
Financial Leverage Ratio
Temporary Price Reduction
Planned Initial Markup % Formula
34. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Inventory
Markdown Percentage
Current Ratio (CR) Formula
LIFO (last in - first out)
35. The cost of merchandise that was sold (including the method that was used to determine cost)
Pricing Strategies: Price Zones
Cost of Goods Sold
Late Markdowns
Balance Sheet
36. 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.
Cost Complement Formula
Inventory
Acid test or Quick Ratio
Assets
37. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
Return on Sales
Return on Net Worth (RONW) Formula
Retail Inventory Method
38. Liabilities+ Owner's equity or net worth
Markdown Percentage
FIFO (First in - First out)
Assets Formula
Financial Leverage Ratio
39. Evaluates the managament of capital
Return on Sales
Return on Net Worth (RONW) Formula
FIFO (First in - First out)
Reasons for taking Markdowns
40. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Loss-Leader
FIFO (First in - First out)
Pricing Depends on 2 factors
41. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Return on Assets
Cost of Goods Sold (COGS) Formula
Net Profit
Operating Expenses
42. Cost Price/ (100%-markup %)
Forced Obsolescence
Off-Price Markdowns
Retail Price Formula
LIFO (last in - first out)
43. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Debt Equity Ratio Formula
Return on Net Worth
Fixed Assets
Initial Markup (IMU)
44. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
FIFO (First in - First out)
Off-Price Markdown Percentage Formula
Markdown Optimization
Pricing Strategies: Price Lining
45. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Early Markdowns
Late Markdowns
Accounts Receivable (AR)
Buying Errors
46. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Expense Ratio Formula
Acid test or Quick Ratio
Planned Initial Markup % Formula
Return on Net Worth
47. 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)
Reasons for taking Markdowns
Initial Markup (IMU)
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%
Fixed Liabilities
Fixed Assets
Return on Assets (ROA) Formul
Planned Initial Markup % Formula
49. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
Initial Markup (IMU)
Return on Assets (ROA) Formul
Depreciation
50. Total Expenses/ Net Sales
Return on Assets
Acid Test or Quick Ratio (QR) Formula
Expense Ratio Formula
Markup % of Retail Formula