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Test your basic knowledge |
Retail Financials
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. 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.
Accounts Receivable (AR)
Pricing Errors
Pricing Strategies
Acid Test or Quick Ratio (QR) Formula
2. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Retail Inventory Method
Cost of Goods Sold (COGS) Formula
Markdown
Markdown Percentage
3. 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
Depreciation
Cost of Goods Sold
Clearance Markdowns
Initial Markup (IMU)
4. 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.
Expense Ratio
Selling Price Formula
Off-Price Markdown Percentage Formula
Profit Margin Analysis Formula
5. The cost of merchandise that was sold (including the method that was used to determine cost)
Early Markdowns
Cost of Goods Sold
Markdown Percentage
Sell-Through Rate
6. Liabilities+ Owner's equity or net worth
Current Ratio (CR) Formula
Pricing Strategies: Price Zones
Pricing Errors
Assets Formula
7. Price is changed (up or down)
Markup % of Cost Formula
Promotional Markdown
New Price
Fixed Liabilities
8. Sales for the period/ average inventory
Turnover Rate Formula
Dollar Markdown Formula
Price Sensitivity
Markup
9. Evaluates the managament of capital
Late Markdowns
Return on Sales
Liabilities
FIFO (First in - First out)
10. 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.
Early Markdowns
Return on Assets (ROA) Formul
Pricing Strategies: Price Zones
Acid test or Quick Ratio
11. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Net Sales
Profit Margin
Markdown Optimization
12. Usually lower than original - but held for longer period
Profit
Promotion Errors
Regular Price
FIFO (First in - First out)
13. The retailers financial condition at a specific point in time
Balance Sheet
Pricing Strategies: Price Ranges
Accounts Receivable (AR)
Original Price
14. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Operating Expenses
Reasons for taking Markdowns
Balance Sheet
Retail Inventory Method
15. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Dollar Markdown Formula
Return on Sales
Balance Sheet
16. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Uncontrollable Errors
Profit and Loss Statement (P&L Statement)
Dollar Markdown Formula
Return on Net Worth
17. 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
Expense Ratio Formula
LIFO (last in - first out)
Net Profit
Adage of Profitability for Retailers
18. Sales less cost of goods sold
Pricing Depends on 2 factors
Sell-Through Rate
Gross Margin
Markdown Cancellation ($) Formula
19. 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
Debt Equity Ratio
5 Steps of Retail Inventory Method
Gross Margin Return on Inventory Investment-GMROI Formula
Current Ratio
20. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Sell-Through Rate
Liabilities
Current Assets
Pricing Strategies: Price Lining
21. 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
Pricing Strategies: Price Ranges
Markdown Optimization
Selling Price Formula
22. Temporary price reduction for a specific period of time for the express purpose of generating store traffic and sales. Prices return to original retail price at end of sale period.
Net Profit
Profit Margin
Cost Complement Formula
Promotional Markdown
23. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Clearance Markdowns
Price Sensitivity
Markdown optimization
Net Profit
24. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Adage of Profitability for Retailers
Markup % of Cost Formula
Acid Test or Quick Ratio (QR) Formula
25. 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
Balance Sheet
Loss-Leader
Pricing Depends on 2 factors
26. The energizing force that fuels and sustains our economic system
Selling Price Formula
Profit
Clearance Markdowns
Off-Price Markdowns
27. Original Retail price- markdown selling price
Financial Leverage Ratio
Dollar Markdown Formula
Cost Complement Formula
Return on Net Worth
28. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Regular Price
Liabilities
Initial Markup (IMU)
Ideal Markdown
29. Revenues received by a retailer
Balance Sheet
Original Price
Operating Expenses
Net Sales
30. Current Assets/ Current Liabilities
Uncontrollable Errors
FIFO (First in - First out)
Current Ratio (CR) Formula
5 Steps of Retail Inventory Method
31. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Dollar Markdown Formula
Turnover Rate Formula
Debt Equity Ratio
32. 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
Profit Margin
Initial Markup (IMU)
Retail Price Formula
Selling Price Formula
33. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Return on Assets
Sell-Through Rate
Liabilities
New Price
34. Can be transformed simply and rapidly into cash
The Cost Method
Markup
Current Assets
Profit Margin Analysis Formula
35. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Liabilities
Markup % of Cost Formula
Adage of Profitability for Retailers
Pricing Errors
36. Promotional markdown that involves selling at or near cost for promotional purposes
GMROII (Gross Margin Return on Inventory Investment)
Accounts Receivable (AR)
Assets
Loss-Leader
37. One that is just enough to move the goods
Operating Expenses
Ideal Markdown
Current Assets
Adage of Profitability for Retailers
38. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
New Price
Pricing Errors
Markdown Cancellations
Cost Complement Formula
39. Financial debts incurred by a retailer
Markdown
Acid test or Quick Ratio
Markdown Percentage
Liabilities
40. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Markdown optimization
Profit
Off-Price Markdowns
Late Markdowns
41. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Pricing Errors
Depreciation
Acid Test or Quick Ratio (QR) Formula
42. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Cost of Goods Sold (COGS) Formula
Expense Ratio
GMROII (Gross Margin Return on Inventory Investment)
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.
Markdown Percentage Formula
Profit and Loss Statement (P&L Statement)
Markup
Pricing Strategies
44. 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
Forced Obsolescence
Expense Ratio
Debt Equity Ratio
Current Ratio (CR) Formula
45. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Sell-Through Rate
Fixed Assets
Net Sales
Profit Margin
46. Cost + Markup
Pricing Strategies: Price Zones
Off-Price Markdown Percentage Formula
Return on Assets (ROA) Formul
Selling Price Formula
47. Total Assets/ Net Worth
Debt Equity Ratio Formula
Balance Sheet
Financial Leverage Ratio Formula
Late Markdowns
48. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Profit
Return on Assets (ROA) Formul
Forced Obsolescence
49. 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
Operating Expenses
Profit Margin Analysis Formula
Price Sensitivity
Adage of Profitability for Retailers
50. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
New Price
Inventory
Expense Ratio Formula
Markdown Percentage
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