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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. Liabilities+ Owner's equity or net worth
Cash Flow Formula
Assets Formula
Planned Initial Markup % Formula
Net Sales
2. Dollar markup ($)/ retail price ($)
Loss-Leader
Markup % of Retail Formula
Profit
Markdown Percentage Formula
3. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Return on Assets
Retail Price Formula
Return on Assets (ROA) Formul
4. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Price Sensitivity
5 Steps of Retail Inventory Method
Turnover Rate Formula
5. What the retailer owns in monetary value
Pricing Errors
Assets
Cost of Goods Sold
Early Markdowns
6. Cost + Markup
Return on Assets
Fixed Liabilities
Selling Price Formula
New Price
7. 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.
Forced Obsolescence
Regular Price
Inventory
Retail Inventory Method
8. 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
Balance Sheet
Sell-Through Rate
5 Steps of Retail Inventory Method
9. The cost of merchandise that was sold (including the method that was used to determine cost)
Cost Complement Formula
Expense Ratio Formula
Cost of Goods Sold
Initial Markup (IMU)
10. Buying errors - promotion errors - pricing errors - uncontrollable errors
Pricing Strategies: Price Ranges
Reasons for taking Markdowns
Cost Complement Formula
Fixed Assets
11. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Buying Errors
Financial Leverage Ratio
Fixed Assets
Dollar Markdown Formula
12. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Off-Price Markdown Percentage Formula
Assets Formula
Markdown Percentage
Cost of Goods Sold
13. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Debt Equity Ratio
Cash Flow Formula
Accounts Receivable (AR)
14. 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
Retail Price Formula
Profit and Loss Statement (P&L Statement)
Debt Equity Ratio Formula
Early Markdowns
15. 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
Sell-Through Rate
Markdown Cancellations
Markup
Markdown Cancellation ($) Formula
16. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Profit Margin
Liabilities
Balance Sheet
Cumulative Markup
17. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Cumulative Markup % Formula
Return on Assets
Profit Margin Analysis Formula
Initial Markup (IMU)
18. Price reduction for merchandise that has not lived up to buyers' expectations. Includes broken assortments of merchandise - merchandise lines that buyers no longer want to carry - shopworn goods - items that haven't sold because of an event beyond bu
Liabilities
Clearance Markdowns
Loss-Leader
Promotional Markdown
19. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Regular Price
Pricing Strategies: Price Lining
Fixed Assets
Cost of Goods Sold (COGS) Formula
20. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Initial Markup (IMU)
Current Ratio (CR) Formula
Gross Margin Return on Inventory Investment-GMROI Formula
21. The number of items remaining in stock x dollar markdown
Temporary Price Reduction
Current Liabilities
Cash Flow Formula
Markdown Cancellation ($) Formula
22. Cash Received by the retailer-cash leaving the retailer
Regular Price
Pricing Depends on 2 factors
Cash Flow Formula
Fixed Liabilities
23. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Late Markdowns
Liabilities
Promotional Markdown
Fixed Liabilities
24. Priced too high initially - priced too low - selling price of competitors
Balance Sheet
Pricing Errors
Markdown Cancellations
Off-Price Markdown Percentage Formula
25. 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
Current Ratio
Debt Equity Ratio
Off-Price Markdowns
Cost of Goods Sold
26. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown
Buying Errors
Return on Net Worth (RONW) Formula
Loss-Leader
27. Original Retail price- markdown selling price
Assets Formula
Profit Margin Analysis Formula
Dollar Markdown Formula
GMROII (Gross Margin Return on Inventory Investment)
28. Net Profit/ Net Sales
Promotional Markdown
Financial Leverage Ratio Formula
Markdown optimization
Profit Margin Analysis Formula
29. One that is just enough to move the goods
Loss-Leader
Gross Margin Return on Inventory Investment-GMROI Formula
Ideal Markdown
Adage of Profitability for Retailers
30. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Forced Obsolescence
Late Markdowns
Markdown Percentage
Selling Price Formula
31. Price Lining - price zones - price ranges
Pricing Strategies
Loss-Leader
Current Liabilities
Cost Complement Formula
32. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Profit and Loss Statement (P&L Statement)
Financial Leverage Ratio
Retail Price Formula
33. 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.
Promotional Markdown
Pricing Strategies
Return on Net Worth
Reasons for taking Markdowns
34. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Retail Inventory Method
Return on Net Worth
Selling Price Formula
Current Ratio
35. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Accounts Receivable (AR)
Cost of Goods Sold (COGS) Formula
Selling Price Formula
36. Evaluates the managament of capital
Profit
Pricing Strategies: Price Lining
Return on Sales
Pricing Errors
37. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Pricing Strategies
5 Steps of Retail Inventory Method
Original Price
38. Current Assets/ Current Liabilities
Early Markdowns
Current Ratio (CR) Formula
Ideal Markdown
Assets Formula
39. The weather - merchandise is shopworn - economic downturn
Temporary Price Reduction
Acid Test or Quick Ratio (QR) Formula
Uncontrollable Errors
Loss-Leader
40. Price is changed (up or down)
Original Price
Assets Formula
Markdown Cancellations
New Price
41. Net dollar markdown/ net dollar selling price
Depreciation
New Price
Markdown Percentage Formula
Markdown Cancellation ($) Formula
42. 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
Promotion Errors
Return on Net Worth
Cumulative Markup
The Cost Method
43. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Financial Leverage Ratio
Retail Inventory Method
Net Profit
Profit Margin Analysis Formula
44. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Liabilities
Off-Price Markdowns
Financial Leverage Ratio Formula
Fixed Liabilities
45. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Loss-Leader
GMROII (Gross Margin Return on Inventory Investment)
Pricing Strategies: Price Lining
Profit Margin
46. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Markdown Percentage
Original Price
Cumulative Markup
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
Financial Leverage Ratio Formula
Profit Margin
Fixed Assets
GMROII (Gross Margin Return on Inventory Investment)
48. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Return on Assets
Return on Assets (ROA) Formul
Temporary Price Reduction
Pricing Strategies: Price Ranges
49. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Liabilities
Retail Inventory Method
Expense Ratio
Cost of Goods Sold
50. Can be transformed simply and rapidly into cash
Acid Test or Quick Ratio (QR) Formula
Current Liabilities
Current Assets
Retail Inventory Method