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Retail Financials
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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 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.
Current Ratio
Acid test or Quick Ratio
Inventory
Balance Sheet
2. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Retail Inventory Method
Markdown Cancellations
Acid test or Quick Ratio
Cost of Goods Sold (COGS) Formula
3. Promotional markdown that involves selling at or near cost for promotional purposes
Loss-Leader
Liabilities
Original Price
Turnover Rate Formula
4. Liabilities+ Owner's equity or net worth
Fixed Liabilities
Assets Formula
Markdown Cancellation ($) Formula
Temporary Price Reduction
5. Price reduction for merchandise that has not lived up to buyers' expectations. Includes broken assortments of merchandise - merchandise lines that buyers no longer want to carry - shopworn goods - items that haven't sold because of an event beyond bu
Regular Price
GMROII (Gross Margin Return on Inventory Investment)
Cumulative Markup
Clearance Markdowns
6. Merchandise will sell at highest price longer period of time - appear exclusive - sale of goods at regular price is not disrupted - greater amount of goods can be accumulated and then marked down.
Late Markdowns
Price Sensitivity
Cost of Goods Sold
Reasons for taking Markdowns
7. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Accounts Receivable (AR)
Pricing Strategies: Price Ranges
Return on Net Worth
8. Buying errors - promotion errors - pricing errors - uncontrollable errors
Clearance Markdowns
Promotion Errors
Pricing Strategies
Reasons for taking Markdowns
9. Having the right merchandise - at the right time - for the right price - in the right place
Pricing Strategies: Price Lining
Gross Margin Return on Inventory Investment-GMROI Formula
Adage of Profitability for Retailers
Buying Errors
10. The number of items remaining in stock x dollar markdown
Pricing Strategies: Price Zones
Expense Ratio Formula
Initial Markup (IMU)
Markdown Cancellation ($) Formula
11. Net Profit After Taxes/ Net Worth
Markdown
Markup % of Cost Formula
Return on Net Worth (RONW) Formula
Early Markdowns
12. 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.
Markup % of Cost Formula
Pricing Strategies: Price Zones
Acid test or Quick Ratio
Markdown Percentage
13. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Original Price
Retail Inventory Method
Profit and Loss Statement (P&L Statement)
Debt Equity Ratio
14. Revenues received by a retailer
Net Sales
Markdown Cancellation ($) Formula
Debt Equity Ratio Formula
New Price
15. One that is just enough to move the goods
Ideal Markdown
Buying Errors
Assets Formula
Adage of Profitability for Retailers
16. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Markdown Cancellation ($) Formula
Promotional Markdown
Return on Net Worth
Cumulative Markup % Formula
17. Original Retail price- markdown selling price
Liabilities
Dollar Markdown Formula
Gross Margin
Markdown
18. 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
Early Markdowns
Inventory
Markup
Buying Errors
19. 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
Debt Equity Ratio Formula
5 Steps of Retail Inventory Method
Buying Errors
Initial Markup (IMU)
20. 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
Debt Equity Ratio
Promotion Errors
LIFO (last in - first out)
Selling Price Formula
21. (gross margin % x Turnover) / (100%-markup %)
Balance Sheet
Clearance Markdowns
Gross Margin Return on Inventory Investment-GMROI Formula
FIFO (First in - First out)
22. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Loss-Leader
Fixed Liabilities
Markup % of Cost Formula
Dollar Markdown Formula
23. Price Lining - price zones - price ranges
Markup
Markdown
Markdown Percentage
Pricing Strategies
24. The energizing force that fuels and sustains our economic system
Ideal Markdown
Markdown Optimization
Profit
Depreciation
25. 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
Temporary Price Reduction
The Cost Method
Buying Errors
Markdown
26. Short time - like 1 or 2 day sales
Sell-Through Rate
Temporary Price Reduction
Forced Obsolescence
Return on Sales
27. Dollar markup ($)/ cost price ($)
Retail Inventory Method
Markup % of Cost Formula
Liabilities
Financial Leverage Ratio
28. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Profit
LIFO (last in - first out)
Current Ratio (CR) Formula
Markdown Percentage
29. Sales less cost of goods sold
Markdown Percentage Formula
Return on Net Worth
Initial Markup (IMU)
Gross Margin
30. The weather - merchandise is shopworn - economic downturn
Planned Initial Markup % Formula
Uncontrollable Errors
Liabilities
Regular Price
31. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Pricing Errors
Return on Net Worth
Reasons for taking Markdowns
32. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Return on Assets
Retail Price Formula
Accounts Receivable (AR)
Initial Markup (IMU)
33. 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
Inventory
Acid Test or Quick Ratio (QR) Formula
Buying Errors
Profit Margin
34. 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.
Profit Margin
Promotional Markdown
Pricing Strategies: Price Zones
Markup
35. 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.
Uncontrollable Errors
Inventory
Current Ratio (CR) Formula
Accounts Receivable (AR)
36. The cost of merchandise that was sold (including the method that was used to determine cost)
Acid test or Quick Ratio
Markdown
Promotional Markdown
Cost of Goods Sold
37. 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.
Cost of Goods Sold (COGS) Formula
Profit
Expense Ratio
Pricing Errors
38. 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
Gross Margin
Markdown Cancellation ($) Formula
5 Steps of Retail Inventory Method
Current Ratio
39. Total Markup on all goods on hand/ retail price of all goods on hand
LIFO (last in - first out)
Late Markdowns
Cumulative Markup % Formula
Adage of Profitability for Retailers
40. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Adage of Profitability for Retailers
Off-Price Markdowns
Markdown Optimization
Current Ratio
41. Examines the financial health of a retailer - as one of the best indicators of having too much debt in relationship to net worth. Comparres the money that vendors or banks are risking with the money that the retail owners have invested in their opera
Planned Initial Markup % Formula
Debt Equity Ratio
Expense Ratio Formula
The Cost Method
42. Total Expenses/ Net Sales
Debt Equity Ratio
Expense Ratio Formula
FIFO (First in - First out)
Loss-Leader
43. Cash Received by the retailer-cash leaving the retailer
Pricing Errors
Pricing Strategies: Price Zones
Markdown Percentage
Cash Flow Formula
44. The prices from lowest to highest that are carried within a merchandise category
Loss-Leader
Pricing Strategies: Price Ranges
Temporary Price Reduction
Current Ratio
45. Sales for the period/ average inventory
Turnover Rate Formula
Sell-Through Rate
Cost of Goods Sold
Net Profit
46. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Adage of Profitability for Retailers
Financial Leverage Ratio
Price Sensitivity
Pricing Depends on 2 factors
47. Net Profit/ Net Sales
Profit Margin Analysis Formula
Markdown
Cumulative Markup
Reasons for taking Markdowns
48. Costs involved in running the business
GMROII (Gross Margin Return on Inventory Investment)
Uncontrollable Errors
Pricing Strategies
Operating Expenses
49. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Current Assets
Reasons for taking Markdowns
Acid Test or Quick Ratio (QR) Formula
50. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Markup % of Retail Formula
Original Price
Fixed Liabilities
Off-Price Markdowns
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