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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. Improper displays - merchandise returns due to high pressure selling
Clearance Markdowns
Promotion Errors
Net Profit
Acid test or Quick Ratio
2. 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
Initial Markup (IMU)
Profit Margin Analysis Formula
Adage of Profitability for Retailers
5 Steps of Retail Inventory Method
3. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Pricing Strategies
Markup % of Cost Formula
Adage of Profitability for Retailers
Initial Markup (IMU)
4. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
Off-Price Markdowns
Adage of Profitability for Retailers
Regular Price
5. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Profit and Loss Statement (P&L Statement)
Gross Margin
Adage of Profitability for Retailers
Debt Equity Ratio Formula
6. (Cash + Accounts Receivable) / Current Liabilities
Off-Price Markdown Percentage Formula
Pricing Strategies: Price Ranges
Acid Test or Quick Ratio (QR) Formula
Dollar Markdown Formula
7. Usually lower than original - but held for longer period
Cumulative Markup % Formula
Selling Price Formula
Regular Price
Original Price
8. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Financial Leverage Ratio
Pricing Depends on 2 factors
Late Markdowns
Sell-Through Rate
9. 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
Fixed Liabilities
Markup
Initial Markup (IMU)
10. 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
Markdown Cancellations
Profit
Planned Initial Markup % Formula
Sell-Through Rate
11. Examines the financial health of a retailer - as one of the best indicators of having too much debt in relationship to net worth. Comparres the money that vendors or banks are risking with the money that the retail owners have invested in their opera
Profit Margin
Balance Sheet
Markdown Optimization
Debt Equity Ratio
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.
Pricing Strategies: Price Ranges
Accounts Receivable (AR)
Cumulative Markup
Balance Sheet
13. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Return on Net Worth
Pricing Strategies: Price Lining
Inventory
14. Original Retail price- markdown selling price
Dollar Markdown Formula
Fixed Assets
FIFO (First in - First out)
Acid test or Quick Ratio
15. Cash Received by the retailer-cash leaving the retailer
Cost of Goods Sold (COGS) Formula
Cash Flow Formula
FIFO (First in - First out)
Promotional Markdown
16. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Off-Price Markdowns
Expense Ratio
Depreciation
17. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
New Price
Financial Leverage Ratio Formula
Return on Net Worth (RONW) Formula
Pricing Strategies: Price Lining
18. Liabilities+ Owner's equity or net worth
5 Steps of Retail Inventory Method
Current Ratio
Assets Formula
Markdown Cancellations
19. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Initial Markup (IMU)
Off-Price Markdowns
Accounts Receivable (AR)
20. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Clearance Markdowns
Markdown
Early Markdowns
Buying Errors
21. 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
Current Liabilities
Acid test or Quick Ratio
The Cost Method
Fixed Assets
22. One that is just enough to move the goods
Retail Inventory Method
Ideal Markdown
Markdown Cancellations
Return on Assets (ROA) Formul
23. Cost Price/ (100%-markup %)
New Price
Early Markdowns
Retail Price Formula
Depreciation
24. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Temporary Price Reduction
Retail Price Formula
Markdown optimization
Acid test or Quick Ratio
25. Sales for the period/ average inventory
Markdown optimization
Depreciation
Cost of Goods Sold
Turnover Rate Formula
26. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Return on Net Worth
Early Markdowns
Return on Assets (ROA) Formul
Acid Test or Quick Ratio (QR) Formula
27. Current Liabilites/ Net Worth
Loss-Leader
Promotional Markdown
Debt Equity Ratio Formula
5 Steps of Retail Inventory Method
28. Net Profit/ Net Sales
Return on Sales
Profit Margin Analysis Formula
Pricing Strategies
Cost Complement Formula
29. 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.
Late Markdowns
Markup % of Retail Formula
Retail Inventory Method
Early Markdowns
30. 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
Markup % of Cost Formula
FIFO (First in - First out)
Cost Complement Formula
Current Ratio (CR) Formula
31. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Current Liabilities
Expense Ratio Formula
Off-Price Markdowns
Net Profit
32. Current Assets/ Current Liabilities
Cost of Goods Sold
Current Ratio (CR) Formula
Fixed Liabilities
Profit and Loss Statement (P&L Statement)
33. Priced too high initially - priced too low - selling price of competitors
Markdown
Depreciation
Markdown Optimization
Pricing Errors
34. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
LIFO (last in - first out)
Original Price
Markdown Percentage Formula
Fixed Liabilities
35. Evaluates the managament of capital
Fixed Assets
Uncontrollable Errors
Assets
Return on Sales
36. What the retailer owns in monetary value
Markup
Assets
Pricing Strategies: Price Lining
Late Markdowns
37. Price Lining - price zones - price ranges
Pricing Strategies
Uncontrollable Errors
Balance Sheet
Cumulative Markup
38. (gross margin % x Turnover) / (100%-markup %)
Acid Test or Quick Ratio (QR) Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Return on Net Worth (RONW) Formula
LIFO (last in - first out)
39. Sales less cost of goods sold
Gross Margin
Return on Assets
Original Price
Markdown Cancellations
40. (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%
Forced Obsolescence
Uncontrollable Errors
Planned Initial Markup % Formula
Markup % of Cost Formula
41. First price or Manufacturers suggestet Retal Price (MSRP)
Current Ratio
Cash Flow Formula
Original Price
Promotion Errors
42. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold (COGS) Formula
New Price
Pricing Errors
5 Steps of Retail Inventory Method
43. 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.
Turnover Rate Formula
Sell-Through Rate
Markup
Current Assets
44. 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
Profit Margin
Markdown Percentage
GMROII (Gross Margin Return on Inventory Investment)
45. Promotional markdown that involves selling at or near cost for promotional purposes
Cumulative Markup % Formula
Cash Flow Formula
Initial Markup (IMU)
Loss-Leader
46. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Expense Ratio Formula
Reasons for taking Markdowns
Buying Errors
Markdown Percentage
47. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Ideal Markdown
Debt Equity Ratio
Markdown optimization
Retail Inventory Method
48. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Pricing Strategies
Profit Margin
Return on Assets (ROA) Formul
49. Revenues received by a retailer
Net Sales
Markdown Percentage
Profit and Loss Statement (P&L Statement)
Financial Leverage Ratio
50. 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
Price Sensitivity
Ideal Markdown
Profit Margin
Pricing Depends on 2 factors