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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. Price Lining - price zones - price ranges
Retail Inventory Method
Pricing Strategies
Acid Test or Quick Ratio (QR) Formula
Adage of Profitability for Retailers
2. 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
Original Price
Inventory
Profit and Loss Statement (P&L Statement)
3. Dollar markup ($)/ retail price ($)
Markup % of Cost Formula
Markup % of Retail Formula
Pricing Errors
Return on Sales
4. 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
Gross Margin
Financial Leverage Ratio Formula
Price Sensitivity
Current Assets
5. Can be transformed simply and rapidly into cash
Acid test or Quick Ratio
Cost Complement Formula
Current Assets
Turnover Rate Formula
6. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Acid test or Quick Ratio
Return on Sales
Operating Expenses
7. (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%
Markdown Optimization
Return on Assets
Return on Net Worth
Planned Initial Markup % Formula
8. Priced too high initially - priced too low - selling price of competitors
Pricing Depends on 2 factors
Cost of Goods Sold
Pricing Errors
Profit Margin
9. 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
Markup % of Retail Formula
5 Steps of Retail Inventory Method
Debt Equity Ratio Formula
Net Sales
10. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Early Markdowns
Acid test or Quick Ratio
Return on Assets (ROA) Formul
11. Liabilities+ Owner's equity or net worth
Pricing Errors
Assets Formula
Selling Price Formula
Liabilities
12. Net dollar markdown/ net dollar selling price
Profit and Loss Statement (P&L Statement)
Pricing Strategies: Price Zones
Retail Price Formula
Markdown Percentage Formula
13. Usually lower than original - but held for longer period
Debt Equity Ratio
Initial Markup (IMU)
Sell-Through Rate
Regular Price
14. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
Selling Price Formula
Cost Complement Formula
Regular Price
15. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Profit Margin
Markdown Optimization
Retail Price Formula
Fixed Liabilities
16. Net Profit/ Net Sales
Current Liabilities
Fixed Liabilities
Debt Equity Ratio
Profit Margin Analysis Formula
17. Ranges of prices that appeals for a particular group of consumers
Cumulative Markup % Formula
Accounts Receivable (AR)
Pricing Strategies: Price Zones
Acid Test or Quick Ratio (QR) Formula
18. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Regular Price
Profit Margin Analysis Formula
Buying Errors
Assets
19. 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)
Adage of Profitability for Retailers
Fixed Liabilities
Inventory
20. 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.
Price Sensitivity
Acid test or Quick Ratio
Cost Complement Formula
Markdown Percentage Formula
21. Cost + Markup
5 Steps of Retail Inventory Method
Selling Price Formula
Gross Margin
Markdown
22. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Return on Net Worth
Current Liabilities
Uncontrollable Errors
23. Costs involved in running the business
Operating Expenses
Reasons for taking Markdowns
Financial Leverage Ratio
Current Liabilities
24. Original Retail price- markdown selling price
5 Steps of Retail Inventory Method
Profit Margin Analysis Formula
GMROII (Gross Margin Return on Inventory Investment)
Dollar Markdown Formula
25. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Current Liabilities
Markdown Cancellations
Initial Markup (IMU)
Net Sales
26. Current Liabilites/ Net Worth
Debt Equity Ratio
Debt Equity Ratio Formula
Off-Price Markdowns
Markdown
27. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Depreciation
Profit and Loss Statement (P&L Statement)
Return on Net Worth (RONW) Formula
Return on Assets (ROA) Formul
28. 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
Promotional Markdown
Price Sensitivity
Markdown
29. 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.
Markdown Optimization
Fixed Assets
Markup
Inventory
30. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Cost of Goods Sold
Return on Assets
Pricing Depends on 2 factors
Promotional Markdown
31. Revenues received by a retailer
Net Sales
Assets Formula
Operating Expenses
Return on Assets (ROA) Formul
32. Evaluates the managament of capital
Off-Price Markdown Percentage Formula
Markdown Percentage
Return on Sales
Depreciation
33. Dollar markup ($)/ cost price ($)
Debt Equity Ratio
Markup % of Cost Formula
Pricing Strategies
Cash Flow Formula
34. Sales less cost of goods sold
Turnover Rate Formula
Sell-Through Rate
Original Price
Gross Margin
35. (Cash + Accounts Receivable) / Current Liabilities
Assets
Debt Equity Ratio
Markdown Cancellations
Acid Test or Quick Ratio (QR) Formula
36. The weather - merchandise is shopworn - economic downturn
Turnover Rate Formula
Uncontrollable Errors
Balance Sheet
Markdown Percentage Formula
37. Short time - like 1 or 2 day sales
Temporary Price Reduction
Pricing Strategies: Price Ranges
Forced Obsolescence
Current Liabilities
38. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Regular Price
Retail Inventory Method
Original Price
Markdown optimization
39. Total Assets/ Net Worth
Pricing Strategies: Price Zones
Pricing Depends on 2 factors
Return on Net Worth
Financial Leverage Ratio Formula
40. 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
Cost of Goods Sold
Current Liabilities
Liabilities
LIFO (last in - first out)
41. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Assets
Promotion Errors
Retail Price Formula
Financial Leverage Ratio
42. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Forced Obsolescence
Off-Price Markdown Percentage Formula
Retail Inventory Method
Early Markdowns
43. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Clearance Markdowns
Retail Inventory Method
Profit
Markup % of Cost Formula
44. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Temporary Price Reduction
Initial Markup (IMU)
Operating Expenses
Financial Leverage Ratio Formula
45. 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
Acid test or Quick Ratio
Profit Margin
Expense Ratio
46. Cash Received by the retailer-cash leaving the retailer
Net Sales
Cash Flow Formula
Pricing Depends on 2 factors
Inventory
47. Having the right merchandise - at the right time - for the right price - in the right place
Markdown
Return on Net Worth (RONW) Formula
Profit
Adage of Profitability for Retailers
48. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Financial Leverage Ratio
Selling Price Formula
Cost Complement Formula
Pricing Strategies: Price Zones
49. 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
Promotion Errors
Forced Obsolescence
Cost of Goods Sold
Current Ratio
50. Current Assets/ Current Liabilities
Ideal Markdown
Original Price
Current Ratio (CR) Formula
Pricing Strategies: Price Lining