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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. Sales less cost of goods sold
GMROII (Gross Margin Return on Inventory Investment)
Current Assets
Gross Margin
Return on Assets (ROA) Formul
2. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Fixed Liabilities
Pricing Strategies: Price Lining
Off-Price Markdown Percentage Formula
Accounts Receivable (AR)
3. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Liabilities
Original Price
Pricing Depends on 2 factors
4. Costs involved in running the business
Operating Expenses
Return on Net Worth
5 Steps of Retail Inventory Method
Gross Margin
5. 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.
Cumulative Markup
Early Markdowns
Expense Ratio
Debt Equity Ratio
6. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Cumulative Markup % Formula
Fixed Liabilities
Forced Obsolescence
Markdown Optimization
7. Cost + Markup
Return on Sales
Reasons for taking Markdowns
Selling Price Formula
Financial Leverage Ratio Formula
8. Usually lower than original - but held for longer period
Cumulative Markup % Formula
Return on Assets
Regular Price
Expense Ratio
9. Sales for the period/ average inventory
Turnover Rate Formula
Fixed Liabilities
Markup % of Cost Formula
Return on Net Worth
10. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Pricing Depends on 2 factors
Current Assets
Financial Leverage Ratio
Net Profit
11. The number of items remaining in stock x dollar markdown
Cost Complement Formula
Uncontrollable Errors
Markdown Cancellation ($) Formula
Gross Margin
12. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Buying Errors
Markdown Cancellation ($) Formula
Operating Expenses
Temporary Price Reduction
13. The weather - merchandise is shopworn - economic downturn
Depreciation
Markdown Optimization
Return on Assets (ROA) Formul
Uncontrollable Errors
14. Price Lining - price zones - price ranges
Pricing Errors
Cash Flow Formula
Pricing Strategies
Retail Price Formula
15. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Off-Price Markdowns
Cash Flow Formula
Financial Leverage Ratio
16. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Promotional Markdown
Acid Test or Quick Ratio (QR) Formula
Markup % of Retail Formula
17. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Promotional Markdown
Fixed Assets
Profit Margin
Gross Margin
18. Having the right merchandise - at the right time - for the right price - in the right place
Original Price
Price Sensitivity
Adage of Profitability for Retailers
GMROII (Gross Margin Return on Inventory Investment)
19. 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.
Markdown optimization
Acid test or Quick Ratio
Assets Formula
Return on Net Worth (RONW) Formula
20. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Pricing Strategies: Price Ranges
Markdown Optimization
New Price
21. 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)
Selling Price Formula
Net Profit
Assets
22. 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
Buying Errors
Planned Initial Markup % Formula
Pricing Strategies: Price Lining
LIFO (last in - first out)
23. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Cost of Goods Sold (COGS) Formula
Current Liabilities
Dollar Markdown Formula
Uncontrollable Errors
24. Buying errors - promotion errors - pricing errors - uncontrollable errors
Liabilities
Reasons for taking Markdowns
Return on Net Worth
Cumulative Markup
25. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Pricing Strategies
Turnover Rate Formula
Clearance Markdowns
26. 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
Uncontrollable Errors
Net Sales
Early Markdowns
Promotion Errors
27. 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
Cost of Goods Sold (COGS) Formula
GMROII (Gross Margin Return on Inventory Investment)
Profit Margin Analysis Formula
28. One that is just enough to move the goods
Ideal Markdown
Assets
Pricing Strategies: Price Lining
Profit Margin Analysis Formula
29. Net Profit/ Net Sales
Ideal Markdown
LIFO (last in - first out)
Profit Margin Analysis Formula
Off-Price Markdowns
30. 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
Debt Equity Ratio
Markdown Cancellation ($) Formula
Clearance Markdowns
Markdown optimization
31. Total Assets/ Net Worth
Return on Net Worth (RONW) Formula
New Price
Financial Leverage Ratio Formula
LIFO (last in - first out)
32. 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
Adage of Profitability for Retailers
Assets Formula
Return on Net Worth (RONW) Formula
33. (Cash + Accounts Receivable) / Current Liabilities
Markdown Cancellations
Acid Test or Quick Ratio (QR) Formula
Promotional Markdown
Return on Assets (ROA) Formul
34. 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
Debt Equity Ratio
Fixed Assets
Reasons for taking Markdowns
35. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Markup % of Cost Formula
Fixed Liabilities
Temporary Price Reduction
36. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Late Markdowns
Retail Inventory Method
Profit and Loss Statement (P&L Statement)
Cost Complement Formula
37. The retailers financial condition at a specific point in time
Current Liabilities
Balance Sheet
Profit
Assets
38. 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.
Turnover Rate Formula
Debt Equity Ratio
Retail Price Formula
Inventory
39. Current Assets/ Current Liabilities
Balance Sheet
Current Ratio (CR) Formula
Promotion Errors
Cumulative Markup
40. 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
Depreciation
Acid Test or Quick Ratio (QR) Formula
Profit Margin
Temporary Price Reduction
41. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Uncontrollable Errors
Promotion Errors
Markdown optimization
Pricing Strategies: Price Zones
42. Net Profit After Taxes/ Total Assets
Temporary Price Reduction
The Cost Method
Markdown Optimization
Return on Assets (ROA) Formul
43. Priced too high initially - priced too low - selling price of competitors
Markdown Percentage Formula
Pricing Errors
Late Markdowns
Debt Equity Ratio
44. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Clearance Markdowns
Pricing Strategies: Price Lining
Selling Price Formula
Depreciation
45. The energizing force that fuels and sustains our economic system
Retail Price Formula
Profit
Pricing Errors
Gross Margin Return on Inventory Investment-GMROI Formula
46. Current Liabilites/ Net Worth
Initial Markup (IMU)
Debt Equity Ratio Formula
Profit Margin Analysis Formula
Pricing Strategies: Price Ranges
47. Promotional markdown that involves selling at or near cost for promotional purposes
Temporary Price Reduction
Financial Leverage Ratio
Acid test or Quick Ratio
Loss-Leader
48. 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
Retail Inventory Method
Return on Sales
Cumulative Markup
49. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Fixed Liabilities
Clearance Markdowns
Planned Initial Markup % Formula
LIFO (last in - first out)
50. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Markup
Promotional Markdown
Ideal Markdown
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