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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 cost of merchandise that was sold (including the method that was used to determine cost)
Acid test or Quick Ratio
Financial Leverage Ratio Formula
Cost of Goods Sold
GMROII (Gross Margin Return on Inventory Investment)
2. Revenues received by a retailer
Financial Leverage Ratio
Buying Errors
Net Sales
Accounts Receivable (AR)
3. 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
Fixed Assets
Pricing Strategies: Price Ranges
Promotion Errors
4. Short time - like 1 or 2 day sales
Profit
Pricing Strategies: Price Lining
Original Price
Temporary Price Reduction
5. The weather - merchandise is shopworn - economic downturn
Off-Price Markdowns
Financial Leverage Ratio
Markup % of Retail Formula
Uncontrollable Errors
6. (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
Debt Equity Ratio Formula
Markdown Cancellation ($) Formula
Fixed Assets
7. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Return on Net Worth
Markdown optimization
Promotion Errors
Current Ratio (CR) Formula
8. Financial debts incurred by a retailer
Forced Obsolescence
Markdown
Liabilities
Accounts Receivable (AR)
9. Price Lining - price zones - price ranges
Pricing Strategies
Fixed Assets
Current Ratio (CR) Formula
Return on Net Worth
10. Total Expenses/ Net Sales
Adage of Profitability for Retailers
Reasons for taking Markdowns
Expense Ratio Formula
Markdown Percentage Formula
11. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Profit
Pricing Depends on 2 factors
Pricing Strategies: Price Zones
12. Total Assets/ Net Worth
Gross Margin
Loss-Leader
Regular Price
Financial Leverage Ratio Formula
13. Price is changed (up or down)
Reasons for taking Markdowns
Return on Sales
New Price
Depreciation
14. Evaluates the managament of capital
Return on Sales
Reasons for taking Markdowns
Markdown Cancellation ($) Formula
LIFO (last in - first out)
15. 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.
Return on Assets (ROA) Formul
Depreciation
Current Ratio
Late Markdowns
16. Cost + Markup
Markdown Cancellations
Pricing Strategies: Price Lining
Selling Price Formula
LIFO (last in - first out)
17. The number of items remaining in stock x dollar markdown
Acid Test or Quick Ratio (QR) Formula
Debt Equity Ratio Formula
Markdown Cancellation ($) Formula
Markdown optimization
18. Having the right merchandise - at the right time - for the right price - in the right place
Markdown Cancellations
Adage of Profitability for Retailers
Planned Initial Markup % Formula
Pricing Errors
19. The prices from lowest to highest that are carried within a merchandise category
New Price
Pricing Strategies: Price Ranges
Current Assets
Markdown Percentage Formula
20. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Expense Ratio
Buying Errors
Late Markdowns
Cash Flow Formula
21. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
The Cost Method
Assets
Profit Margin Analysis Formula
22. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Retail Price Formula
Markdown Percentage Formula
Uncontrollable Errors
Initial Markup (IMU)
23. 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
Inventory
Current Ratio
LIFO (last in - first out)
Fixed Liabilities
24. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Off-Price Markdown Percentage Formula
Forced Obsolescence
Markup
Retail Inventory Method
25. 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.
Markup
Current Assets
Cost Complement Formula
Accounts Receivable (AR)
26. (Cash + Accounts Receivable) / Current Liabilities
Temporary Price Reduction
Markdown Percentage Formula
LIFO (last in - first out)
Acid Test or Quick Ratio (QR) Formula
27. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Current Ratio
Depreciation
Current Liabilities
Financial Leverage Ratio
28. Net Profit/ Net Sales
Profit Margin Analysis Formula
Markdown Cancellation ($) Formula
Loss-Leader
Clearance Markdowns
29. Buying errors - promotion errors - pricing errors - uncontrollable errors
Buying Errors
Debt Equity Ratio
Clearance Markdowns
Reasons for taking Markdowns
30. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Return on Assets
LIFO (last in - first out)
Selling Price Formula
Expense Ratio
31. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Regular Price
Cumulative Markup
Profit and Loss Statement (P&L Statement)
Planned Initial Markup % Formula
32. 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
Return on Assets
Operating Expenses
Pricing Strategies
33. Dollar markup ($)/ cost price ($)
Expense Ratio
Off-Price Markdowns
Financial Leverage Ratio
Markup % of Cost Formula
34. First price or Manufacturers suggestet Retal Price (MSRP)
Expense Ratio Formula
Original Price
Profit Margin Analysis Formula
Fixed Assets
35. Total Markup on all goods on hand/ retail price of all goods on hand
Regular Price
Assets Formula
Cumulative Markup % Formula
Debt Equity Ratio Formula
36. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Retail Price Formula
Uncontrollable Errors
Pricing Strategies: Price Lining
37. 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
Expense Ratio
GMROII (Gross Margin Return on Inventory Investment)
Markup % of Retail Formula
Cumulative Markup
38. 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
Temporary Price Reduction
FIFO (First in - First out)
Pricing Strategies: Price Lining
Profit Margin
39. 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
Profit and Loss Statement (P&L Statement)
Ideal Markdown
Operating Expenses
40. Dollar markup ($)/ retail price ($)
Cash Flow Formula
Assets
Fixed Liabilities
Markup % of Retail Formula
41. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Markdown Percentage Formula
Pricing Strategies: Price Zones
Markdown Percentage
42. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Off-Price Markdowns
Loss-Leader
Profit
Markdown
43. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Buying Errors
Original Price
Acid test or Quick Ratio
44. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
GMROII (Gross Margin Return on Inventory Investment)
Clearance Markdowns
Markdown Optimization
Gross Margin
45. Priced too high initially - priced too low - selling price of competitors
Cash Flow Formula
Net Profit
Acid test or Quick Ratio
Pricing Errors
46. 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 Errors
Pricing Strategies: Price Lining
Promotional Markdown
LIFO (last in - first out)
47. Promotional markdown that involves selling at or near cost for promotional purposes
Fixed Assets
Loss-Leader
Depreciation
Adage of Profitability for Retailers
48. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Depreciation
Acid Test or Quick Ratio (QR) Formula
Off-Price Markdown Percentage Formula
Pricing Errors
49. Cash Received by the retailer-cash leaving the retailer
Markup
Late Markdowns
Cash Flow Formula
Markdown optimization
50. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Operating Expenses
Fixed Liabilities
Depreciation
Off-Price Markdown Percentage Formula