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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. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Acid Test or Quick Ratio (QR) Formula
Off-Price Markdown Percentage Formula
Cumulative Markup
Fixed Liabilities
2. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Assets Formula
Expense Ratio Formula
Retail Inventory Method
Net Profit
3. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Markdown
Early Markdowns
Profit and Loss Statement (P&L Statement)
4. 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.
FIFO (First in - First out)
Markup
Selling Price Formula
Uncontrollable Errors
5. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Pricing Strategies: Price Ranges
Price Sensitivity
Current Ratio
Markdown Percentage
6. Net Profit After Taxes/ Total Assets
Balance Sheet
Adage of Profitability for Retailers
GMROII (Gross Margin Return on Inventory Investment)
Return on Assets (ROA) Formul
7. 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)
Original Price
Clearance Markdowns
Markup % of Cost Formula
8. 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
Promotional Markdown
Price Sensitivity
Markup % of Cost Formula
Markdown Percentage
9. 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
Acid test or Quick Ratio
Financial Leverage Ratio Formula
Current Assets
10. 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.
Inventory
Promotional Markdown
Initial Markup (IMU)
Markdown
11. 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
Pricing Strategies: Price Ranges
LIFO (last in - first out)
Pricing Strategies: Price Zones
Pricing Errors
12. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Debt Equity Ratio
Sell-Through Rate
Forced Obsolescence
Inventory
13. Net Profit After Taxes/ Net Worth
Off-Price Markdown Percentage Formula
Return on Net Worth (RONW) Formula
Net Profit
Retail Inventory Method
14. 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)
Retail Price Formula
Initial Markup (IMU)
Markdown optimization
15. 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
Adage of Profitability for Retailers
Off-Price Markdowns
Reasons for taking Markdowns
16. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Uncontrollable Errors
Debt Equity Ratio Formula
Balance Sheet
17. The cost of merchandise that was sold (including the method that was used to determine cost)
Cost of Goods Sold
Return on Assets (ROA) Formul
Expense Ratio Formula
Reasons for taking Markdowns
18. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Retail Price Formula
Markdown Percentage
Pricing Strategies: Price Lining
Off-Price Markdowns
19. 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.
Regular Price
Temporary Price Reduction
Accounts Receivable (AR)
Reasons for taking Markdowns
20. Sales less cost of goods sold
Gross Margin
5 Steps of Retail Inventory Method
Assets
Pricing Depends on 2 factors
21. Current Assets/ Current Liabilities
Current Ratio (CR) Formula
Financial Leverage Ratio
Promotional Markdown
LIFO (last in - first out)
22. Ranges of prices that appeals for a particular group of consumers
Acid Test or Quick Ratio (QR) Formula
Pricing Strategies: Price Zones
Promotion Errors
Off-Price Markdown Percentage Formula
23. 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
5 Steps of Retail Inventory Method
Cash Flow Formula
Current Assets
Promotional Markdown
24. Revenues received by a retailer
Selling Price Formula
Profit Margin Analysis Formula
Net Sales
Clearance Markdowns
25. 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
Forced Obsolescence
Initial Markup (IMU)
Current Ratio
Pricing Errors
26. 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
Selling Price Formula
LIFO (last in - first out)
FIFO (First in - First out)
Return on Assets (ROA) Formul
27. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Ideal Markdown
Clearance Markdowns
Depreciation
Liabilities
28. Sales for the period/ average inventory
Markdown Percentage
Retail Inventory Method
Off-Price Markdowns
Turnover Rate Formula
29. The retailers financial condition at a specific point in time
Off-Price Markdowns
Current Ratio (CR) Formula
Balance Sheet
Markdown Cancellation ($) Formula
30. (Cash + Accounts Receivable) / Current Liabilities
Promotional Markdown
Gross Margin Return on Inventory Investment-GMROI Formula
Acid Test or Quick Ratio (QR) Formula
Regular Price
31. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown Percentage Formula
Markdown
Markup % of Retail Formula
Gross Margin
32. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Cost of Goods Sold
Regular Price
Return on Net Worth
Current Liabilities
33. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Markup % of Retail Formula
Cost Complement Formula
Pricing Depends on 2 factors
34. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Planned Initial Markup % Formula
Turnover Rate Formula
Buying Errors
Accounts Receivable (AR)
35. Promotional markdown that involves selling at or near cost for promotional purposes
Net Sales
Ideal Markdown
Planned Initial Markup % Formula
Loss-Leader
36. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Markdown optimization
Forced Obsolescence
Markdown Cancellation ($) Formula
Cost of Goods Sold (COGS) Formula
37. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Late Markdowns
Expense Ratio
Markup % of Cost Formula
Return on Net Worth
38. Usually lower than original - but held for longer period
Pricing Strategies: Price Lining
Regular Price
Liabilities
Cash Flow Formula
39. Short time - like 1 or 2 day sales
Temporary Price Reduction
Retail Inventory Method
Turnover Rate Formula
Return on Net Worth
40. Improper displays - merchandise returns due to high pressure selling
Fixed Liabilities
Promotion Errors
Pricing Strategies: Price Lining
Buying Errors
41. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Off-Price Markdown Percentage Formula
Cost of Goods Sold (COGS) Formula
Return on Assets
42. 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
Off-Price Markdown Percentage Formula
Adage of Profitability for Retailers
Current Ratio (CR) Formula
Profit Margin
43. Financial debts incurred by a retailer
Reasons for taking Markdowns
Liabilities
New Price
Pricing Strategies: Price Zones
44. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Operating Expenses
Retail Price Formula
Clearance Markdowns
45. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Retail Inventory Method
Selling Price Formula
Fixed Liabilities
Return on Assets
46. Net Profit/ Net Sales
Profit Margin Analysis Formula
Pricing Errors
Markdown Percentage
Retail Inventory Method
47. Evaluates the managament of capital
Return on Sales
GMROII (Gross Margin Return on Inventory Investment)
Gross Margin Return on Inventory Investment-GMROI Formula
Late Markdowns
48. Cost + Markup
Selling Price Formula
Markup % of Retail Formula
Markdown Percentage
Accounts Receivable (AR)
49. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Depreciation
Cost Complement Formula
Liabilities
Markdown Cancellations
50. 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
Retail Inventory Method
Original Price
Expense Ratio Formula