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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. 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 Percentage Formula
Markdown optimization
Adage of Profitability for Retailers
Net Profit
2. Revenues received by a retailer
Net Sales
Markdown optimization
Profit Margin
Expense Ratio
3. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Markup % of Retail Formula
Return on Sales
Current Liabilities
4. The retailers financial condition at a specific point in time
LIFO (last in - first out)
Return on Net Worth (RONW) Formula
Balance Sheet
Reasons for taking Markdowns
5. Costs involved in running the business
Markdown optimization
Markup % of Cost Formula
Cumulative Markup
Operating Expenses
6. Cost Price/ (100%-markup %)
Markup % of Retail Formula
Pricing Strategies: Price Lining
Retail Price Formula
5 Steps of Retail Inventory Method
7. One that is just enough to move the goods
Ideal Markdown
FIFO (First in - First out)
Retail Price Formula
Buying Errors
8. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Operating Expenses
Current Ratio
Financial Leverage Ratio
Financial Leverage Ratio Formula
9. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Forced Obsolescence
Pricing Strategies: Price Zones
Assets Formula
Markdown optimization
10. Priced too high initially - priced too low - selling price of competitors
Acid test or Quick Ratio
Current Ratio (CR) Formula
Pricing Errors
LIFO (last in - first out)
11. Total Expenses/ Net Sales
Cost Complement Formula
Expense Ratio Formula
Markup % of Cost Formula
Promotion Errors
12. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Retail Price Formula
Fixed Liabilities
Financial Leverage Ratio
Retail Inventory Method
13. 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.
Cost of Goods Sold
Current Assets
Regular Price
Late Markdowns
14. Usually lower than original - but held for longer period
Markdown optimization
Markdown Cancellations
Current Ratio
Regular Price
15. 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
Dollar Markdown Formula
Clearance Markdowns
Markup % of Cost Formula
Financial Leverage Ratio
16. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Adage of Profitability for Retailers
Return on Assets
Regular Price
Selling Price Formula
17. Evaluates the managament of capital
Return on Sales
Markdown Optimization
Turnover Rate Formula
Reasons for taking Markdowns
18. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Current Liabilities
Current Ratio (CR) Formula
Loss-Leader
19. Sales for the period/ average inventory
Expense Ratio Formula
Assets
Turnover Rate Formula
New Price
20. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Fixed Liabilities
Markdown Cancellation ($) Formula
Expense Ratio Formula
Return on Assets
21. Promotional markdown that involves selling at or near cost for promotional purposes
Loss-Leader
Planned Initial Markup % Formula
Markdown Cancellation ($) Formula
Temporary Price Reduction
22. Net dollar markdown/ net dollar selling price
Retail Inventory Method
Markdown Cancellation ($) Formula
Markdown Percentage Formula
Financial Leverage Ratio
23. Liabilities+ Owner's equity or net worth
Assets Formula
Initial Markup (IMU)
Markdown Percentage
Pricing Strategies: Price Ranges
24. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
New Price
Expense Ratio Formula
Fixed Assets
25. (gross margin % x Turnover) / (100%-markup %)
Markdown Percentage Formula
Buying Errors
Cumulative Markup % Formula
Gross Margin Return on Inventory Investment-GMROI Formula
26. (Cash + Accounts Receivable) / Current Liabilities
Retail Price Formula
Acid Test or Quick Ratio (QR) Formula
Expense Ratio Formula
Return on Net Worth
27. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Return on Net Worth
Net Sales
Acid Test or Quick Ratio (QR) Formula
Retail Inventory Method
28. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Cash Flow Formula
Markdown
GMROII (Gross Margin Return on Inventory Investment)
Current Liabilities
29. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Markdown
Cumulative Markup % Formula
Current Assets
Off-Price Markdown Percentage Formula
30. (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
Selling Price Formula
Regular Price
Financial Leverage Ratio
31. Total Markup on all goods on hand/ retail price of all goods on hand
Inventory
Cumulative Markup % Formula
Return on Net Worth
Acid Test or Quick Ratio (QR) Formula
32. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Retail Inventory Method
Buying Errors
Assets Formula
Reasons for taking Markdowns
33. Price is changed (up or down)
Off-Price Markdown Percentage Formula
New Price
Markdown
Gross Margin Return on Inventory Investment-GMROI Formula
34. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Acid Test or Quick Ratio (QR) Formula
Return on Assets (ROA) Formul
Markup % of Cost Formula
35. 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.
Markup
GMROII (Gross Margin Return on Inventory Investment)
Financial Leverage Ratio
Dollar Markdown Formula
36. Financial debts incurred by a retailer
Liabilities
Off-Price Markdowns
Pricing Depends on 2 factors
Reasons for taking Markdowns
37. Sales less cost of goods sold
Pricing Strategies
Net Sales
Markup
Gross Margin
38. Having the right merchandise - at the right time - for the right price - in the right place
Adage of Profitability for Retailers
Clearance Markdowns
Markup % of Retail Formula
Forced Obsolescence
39. 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
Adage of Profitability for Retailers
Assets Formula
Late Markdowns
FIFO (First in - First out)
40. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Expense Ratio Formula
Markdown Optimization
Retail Inventory Method
Profit and Loss Statement (P&L Statement)
41. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Fixed Liabilities
Depreciation
Markdown Cancellations
Cost of Goods Sold (COGS) Formula
42. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Liabilities
Price Sensitivity
Pricing Strategies: Price Ranges
Fixed Assets
43. 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.
Inventory
Cash Flow Formula
Cumulative Markup % Formula
Pricing Errors
44. Price Lining - price zones - price ranges
Regular Price
Markdown Cancellation ($) Formula
Return on Assets
Pricing Strategies
45. Can be transformed simply and rapidly into cash
Depreciation
Acid test or Quick Ratio
Cumulative Markup % Formula
Current Assets
46. 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
Fixed Liabilities
Gross Margin
Early Markdowns
Promotional Markdown
47. 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
GMROII (Gross Margin Return on Inventory Investment)
Cost of Goods Sold (COGS) Formula
Cost Complement Formula
48. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Profit
Pricing Strategies: Price Ranges
Off-Price Markdown Percentage Formula
Cumulative Markup
49. 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
Markdown Optimization
Markdown
Reasons for taking Markdowns
5 Steps of Retail Inventory Method
50. Net Profit/ Net Sales
Depreciation
Price Sensitivity
Profit Margin Analysis Formula
Ideal Markdown