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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. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Financial Leverage Ratio Formula
Acid Test or Quick Ratio (QR) Formula
Cumulative Markup
Retail Inventory Method
2. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Markdown Cancellation ($) Formula
Loss-Leader
Original Price
Return on Net Worth
3. The cost of merchandise that was sold (including the method that was used to determine cost)
Cost of Goods Sold
Pricing Strategies
Expense Ratio Formula
Expense Ratio
4. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Return on Net Worth (RONW) Formula
Expense Ratio
Ideal Markdown
5. The retailers financial condition at a specific point in time
Expense Ratio
Balance Sheet
Promotional Markdown
Pricing Errors
6. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Retail Price Formula
Inventory
Balance Sheet
Return on Assets
7. Short time - like 1 or 2 day sales
Pricing Errors
Ideal Markdown
Temporary Price Reduction
Markdown optimization
8. Examines the financial health of a retailer - as one of the best indicators of having too much debt in relationship to net worth. Comparres the money that vendors or banks are risking with the money that the retail owners have invested in their opera
Debt Equity Ratio
GMROII (Gross Margin Return on Inventory Investment)
Current Ratio
Gross Margin
9. Dollar markup ($)/ retail price ($)
Reasons for taking Markdowns
Markup % of Retail Formula
Depreciation
Cost of Goods Sold
10. Evaluates the managament of capital
Ideal Markdown
Debt Equity Ratio Formula
Markdown Percentage
Return on Sales
11. Assets collected within one year. Due to the widespread use of credit cards - AR for retailers has diminished with exceptions such as lay-a-way.
Accounts Receivable (AR)
Uncontrollable Errors
Net Sales
Markup
12. Usually lower than original - but held for longer period
Pricing Depends on 2 factors
Liabilities
Regular Price
Gross Margin
13. The awareness of the consumer to what they perceive to be the window of cost within which they will buy a particular product or service
Price Sensitivity
Turnover Rate Formula
Markdown Cancellation ($) Formula
Markdown Percentage Formula
14. Improper displays - merchandise returns due to high pressure selling
Clearance Markdowns
Liabilities
Markdown Percentage Formula
Promotion Errors
15. 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.
Ideal Markdown
Promotional Markdown
Net Profit
Price Sensitivity
16. What the retailer owns in monetary value
Current Ratio (CR) Formula
Acid Test or Quick Ratio (QR) Formula
Assets
Markup % of Cost Formula
17. 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
The Cost Method
Regular Price
Accounts Receivable (AR)
Sell-Through Rate
18. Costs involved in running the business
Fixed Assets
Promotional Markdown
Operating Expenses
Cost of Goods Sold
19. Original Retail price- markdown selling price
Dollar Markdown Formula
Net Sales
Markup % of Cost Formula
Liabilities
20. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Acid Test or Quick Ratio (QR) Formula
Current Ratio
Balance Sheet
21. The prices from lowest to highest that are carried within a merchandise category
Pricing Errors
Return on Assets
Pricing Strategies: Price Ranges
Selling Price Formula
22. 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
Promotion Errors
Early Markdowns
Forced Obsolescence
Price Sensitivity
23. 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
FIFO (First in - First out)
Debt Equity Ratio Formula
Adage of Profitability for Retailers
Return on Sales
24. Liabilities+ Owner's equity or net worth
Clearance Markdowns
Debt Equity Ratio Formula
Assets Formula
Expense Ratio Formula
25. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Fixed Liabilities
Operating Expenses
Markdown optimization
Sell-Through Rate
26. (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%
Planned Initial Markup % Formula
Return on Sales
Acid Test or Quick Ratio (QR) Formula
Inventory
27. Having the right merchandise - at the right time - for the right price - in the right place
Acid test or Quick Ratio
Adage of Profitability for Retailers
Regular Price
Cumulative Markup % Formula
28. Buying errors - promotion errors - pricing errors - uncontrollable errors
Gross Margin
Reasons for taking Markdowns
Cumulative Markup % Formula
Inventory
29. 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.
Markup
Cumulative Markup % Formula
Operating Expenses
New Price
30. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
Buying Errors
New Price
Retail Price Formula
31. 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.
Pricing Errors
Inventory
Pricing Strategies
Regular Price
32. Net Profit/ Net Sales
Gross Margin Return on Inventory Investment-GMROI Formula
Profit Margin Analysis Formula
Profit and Loss Statement (P&L Statement)
Price Sensitivity
33. Net Profit After Taxes/ Total Assets
Pricing Strategies: Price Ranges
Return on Assets
Return on Assets (ROA) Formul
Markup % of Cost Formula
34. The number of items remaining in stock x dollar markdown
Late Markdowns
Return on Assets (ROA) Formul
Off-Price Markdown Percentage Formula
Markdown Cancellation ($) Formula
35. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Cost Complement Formula
Buying Errors
Clearance Markdowns
Current Ratio
36. Sales less cost of goods sold
Profit
Markdown Percentage
Cost Complement Formula
Gross Margin
37. 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
Return on Assets (ROA) Formul
Profit Margin
Profit Margin Analysis Formula
Profit and Loss Statement (P&L Statement)
38. Net Profit After Taxes/ Net Worth
Gross Margin Return on Inventory Investment-GMROI Formula
Profit Margin
Return on Net Worth (RONW) Formula
Assets Formula
39. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Current Ratio
Fixed Liabilities
Return on Net Worth (RONW) Formula
Markdown Optimization
40. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Sell-Through Rate
Retail Price Formula
Buying Errors
41. The weather - merchandise is shopworn - economic downturn
Gross Margin Return on Inventory Investment-GMROI Formula
Price Sensitivity
Profit Margin
Uncontrollable Errors
42. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Forced Obsolescence
Net Sales
Markdown Percentage
43. 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
Return on Sales
GMROII (Gross Margin Return on Inventory Investment)
Debt Equity Ratio
44. Financial debts incurred by a retailer
Profit Margin Analysis Formula
Loss-Leader
Liabilities
Retail Inventory Method
45. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Profit and Loss Statement (P&L Statement)
Markup % of Retail Formula
Forced Obsolescence
Original Price
46. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold
Markdown Percentage
Cost of Goods Sold (COGS) Formula
Markdown optimization
47. One that is just enough to move the goods
Sell-Through Rate
Ideal Markdown
Fixed Liabilities
Markup
48. First price or Manufacturers suggestet Retal Price (MSRP)
FIFO (First in - First out)
Net Profit
Markdown Cancellations
Original Price
49. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Ranges
Profit and Loss Statement (P&L Statement)
Pricing Strategies: Price Lining
Financial Leverage Ratio Formula
50. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Depreciation
Regular Price
Pricing Depends on 2 factors
Financial Leverage Ratio