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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. Dollar markup ($)/ retail price ($)
Cost Complement Formula
Markup % of Retail Formula
Uncontrollable Errors
GMROII (Gross Margin Return on Inventory Investment)
2. (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
Pricing Strategies: Price Zones
Profit and Loss Statement (P&L Statement)
Financial Leverage Ratio
3. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Profit
Cumulative Markup
Profit Margin Analysis Formula
Current Ratio
4. Promotional markdown that involves selling at or near cost for promotional purposes
Buying Errors
Uncontrollable Errors
Loss-Leader
Cost Complement Formula
5. Financial debts incurred by a retailer
Net Profit
Financial Leverage Ratio Formula
Cost of Goods Sold (COGS) Formula
Liabilities
6. Price is changed (up or down)
Acid test or Quick Ratio
Net Sales
Pricing Strategies: Price Lining
New Price
7. Can be transformed simply and rapidly into cash
Current Assets
Early Markdowns
Financial Leverage Ratio Formula
Return on Net Worth
8. 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)
Pricing Depends on 2 factors
Forced Obsolescence
Net Sales
9. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Ideal Markdown
Cost of Goods Sold
Expense Ratio Formula
10. The energizing force that fuels and sustains our economic system
Profit
Cost Complement Formula
Acid Test or Quick Ratio (QR) Formula
Markup
11. What the retailer owns in monetary value
Markup
Return on Sales
Profit Margin Analysis Formula
Assets
12. 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.
Cost of Goods Sold (COGS) Formula
Pricing Strategies
Accounts Receivable (AR)
Assets Formula
13. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Initial Markup (IMU)
Markdown Percentage
Expense Ratio
Cumulative Markup % Formula
14. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Late Markdowns
Off-Price Markdowns
Price Sensitivity
Pricing Strategies: Price Lining
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
Markup
Sell-Through Rate
LIFO (last in - first out)
Fixed Liabilities
16. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
LIFO (last in - first out)
5 Steps of Retail Inventory Method
Fixed Assets
Debt Equity Ratio
17. Cost + Markup
Selling Price Formula
Pricing Depends on 2 factors
LIFO (last in - first out)
Turnover Rate Formula
18. One that is just enough to move the goods
Late Markdowns
Financial Leverage Ratio Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Ideal Markdown
19. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Adage of Profitability for Retailers
Markdown Optimization
Sell-Through Rate
Clearance Markdowns
20. Short time - like 1 or 2 day sales
Temporary Price Reduction
Markup % of Retail Formula
Buying Errors
Forced Obsolescence
21. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Promotion Errors
Regular Price
Buying Errors
Pricing Strategies: Price Ranges
22. 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
Off-Price Markdowns
Price Sensitivity
Forced Obsolescence
Promotional Markdown
23. Cash Received by the retailer-cash leaving the retailer
Assets Formula
Current Ratio (CR) Formula
Cash Flow Formula
Ideal Markdown
24. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Price Sensitivity
Net Profit
Markup
Financial Leverage Ratio
25. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Cost of Goods Sold (COGS) Formula
Off-Price Markdown Percentage Formula
Loss-Leader
Pricing Strategies
26. 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
The Cost Method
Net Sales
Markup
Pricing Depends on 2 factors
27. 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.
Promotion Errors
Expense Ratio
Reasons for taking Markdowns
Cost Complement Formula
28. Sales less cost of goods sold
Return on Sales
Gross Margin
Original Price
Markdown optimization
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.
Pricing Strategies: Price Ranges
Late Markdowns
Cash Flow Formula
Inventory
30. Evaluates the managament of capital
Pricing Errors
Profit Margin Analysis Formula
Return on Sales
Ideal Markdown
31. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Pricing Errors
Cost of Goods Sold (COGS) Formula
Uncontrollable Errors
Balance Sheet
32. Liabilities+ Owner's equity or net worth
Assets Formula
Markdown optimization
Off-Price Markdown Percentage Formula
Temporary Price Reduction
33. Usually lower than original - but held for longer period
Regular Price
Cost of Goods Sold (COGS) Formula
Promotional Markdown
Pricing Strategies: Price Lining
34. Costs involved in running the business
Operating Expenses
Dollar Markdown Formula
Markup
Expense Ratio
35. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Retail Price Formula
Fixed Liabilities
Markdown
Return on Assets
36. The cost of merchandise that was sold (including the method that was used to determine cost)
Loss-Leader
Cost of Goods Sold
Markdown Cancellation ($) Formula
Current Ratio
37. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Markdown optimization
Cost of Goods Sold (COGS) Formula
Return on Assets (ROA) Formul
Pricing Strategies: Price Lining
38. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Fixed Liabilities
Markdown Cancellations
Buying Errors
Debt Equity Ratio
39. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Cost of Goods Sold
Temporary Price Reduction
Expense Ratio
Profit and Loss Statement (P&L Statement)
40. Total Expenses/ Net Sales
Expense Ratio Formula
Markdown Cancellations
Pricing Strategies: Price Zones
Late Markdowns
41. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Gross Margin
Assets Formula
Dollar Markdown Formula
Markdown optimization
42. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Current Assets
Cost Complement Formula
Return on Net Worth
FIFO (First in - First out)
43. First price or Manufacturers suggestet Retal Price (MSRP)
Pricing Strategies: Price Ranges
LIFO (last in - first out)
Promotion Errors
Original Price
44. The retailers financial condition at a specific point in time
Expense Ratio
Off-Price Markdowns
Assets
Balance Sheet
45. Dollar markup ($)/ cost price ($)
Loss-Leader
Return on Sales
Fixed Assets
Markup % of Cost Formula
46. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Regular Price
Current Ratio
Assets Formula
47. Cost Price/ (100%-markup %)
Retail Price Formula
Fixed Assets
Markdown Optimization
Cumulative Markup
48. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Clearance Markdowns
Gross Margin
Current Liabilities
Temporary Price Reduction
49. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Debt Equity Ratio
Operating Expenses
Temporary Price Reduction
50. Sales for the period/ average inventory
Pricing Errors
Gross Margin Return on Inventory Investment-GMROI Formula
Turnover Rate Formula
Off-Price Markdown Percentage Formula