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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. 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 Analysis Formula
Profit Margin
Pricing Depends on 2 factors
Retail Price Formula
2. The cost of merchandise that was sold (including the method that was used to determine cost)
Off-Price Markdown Percentage Formula
Initial Markup (IMU)
Cost of Goods Sold
Sell-Through Rate
3. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Price Sensitivity
Acid Test or Quick Ratio (QR) Formula
Pricing Strategies: Price Ranges
Pricing Strategies: Price Lining
4. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Current Ratio (CR) Formula
Return on Net Worth (RONW) Formula
Cost of Goods Sold (COGS) Formula
Early Markdowns
5. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Initial Markup (IMU)
Retail Inventory Method
Gross Margin
Financial Leverage Ratio
6. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Initial Markup (IMU)
FIFO (First in - First out)
Markup
Current Liabilities
7. 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.
Return on Net Worth (RONW) Formula
Cost Complement Formula
Return on Net Worth
Accounts Receivable (AR)
8. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Return on Assets (ROA) Formul
Current Ratio (CR) Formula
Current Assets
9. Priced too high initially - priced too low - selling price of competitors
Buying Errors
Pricing Errors
Current Liabilities
Cumulative Markup % Formula
10. Sales less cost of goods sold
Return on Net Worth (RONW) Formula
Current Liabilities
Gross Margin
Markdown Optimization
11. 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.
Forced Obsolescence
Clearance Markdowns
Planned Initial Markup % Formula
Inventory
12. The prices from lowest to highest that are carried within a merchandise category
Early Markdowns
Return on Assets
Retail Inventory Method
Pricing Strategies: Price Ranges
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)
Cash Flow Formula
Acid test or Quick Ratio
Markdown optimization
14. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Accounts Receivable (AR)
GMROII (Gross Margin Return on Inventory Investment)
Fixed Assets
Markdown Cancellations
15. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Markdown Cancellation ($) Formula
Sell-Through Rate
Turnover Rate Formula
16. Usually lower than original - but held for longer period
Current Ratio (CR) Formula
Regular Price
Cost Complement Formula
Original Price
17. The higher the ratio the quicker current liabilities can be paid. This ratio also indicates the margin of safety a retailer has on hand to cover possible shrinkages
Temporary Price Reduction
Cost of Goods Sold (COGS) Formula
Return on Net Worth
Current Ratio
18. Price Lining - price zones - price ranges
Retail Inventory Method
Expense Ratio Formula
Pricing Strategies
Loss-Leader
19. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Off-Price Markdown Percentage Formula
Markdown Percentage
Dollar Markdown Formula
Balance Sheet
20. Net Profit/ Net Sales
Profit Margin Analysis Formula
Price Sensitivity
Return on Assets
Balance Sheet
21. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Price Sensitivity
Profit and Loss Statement (P&L Statement)
Off-Price Markdowns
Gross Margin
22. Dollar markup ($)/ retail price ($)
Return on Assets (ROA) Formul
Regular Price
FIFO (First in - First out)
Markup % of Retail Formula
23. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Buying Errors
GMROII (Gross Margin Return on Inventory Investment)
Markup % of Retail Formula
Balance Sheet
24. Evaluates the managament of capital
Liabilities
Expense Ratio
Turnover Rate Formula
Return on Sales
25. Net Profit After Taxes/ Total Assets
Markdown Percentage Formula
Return on Assets (ROA) Formul
Operating Expenses
Uncontrollable Errors
26. What the retailer owns in monetary value
LIFO (last in - first out)
Assets
Initial Markup (IMU)
Selling Price Formula
27. 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
Return on Assets (ROA) Formul
Early Markdowns
Acid Test or Quick Ratio (QR) Formula
Promotional Markdown
28. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Net Sales
Markdown
Markup
Expense Ratio Formula
29. 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
Selling Price Formula
The Cost Method
Expense Ratio
Promotion Errors
30. 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
Markdown Optimization
Return on Net Worth (RONW) Formula
Return on Assets (ROA) Formul
31. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Accounts Receivable (AR)
Cost Complement Formula
Current Assets
Planned Initial Markup % Formula
32. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Price Sensitivity
Markdown Optimization
Markup % of Cost Formula
Pricing Depends on 2 factors
33. Can be transformed simply and rapidly into cash
Current Assets
LIFO (last in - first out)
Cumulative Markup % Formula
FIFO (First in - First out)
34. The retailers financial condition at a specific point in time
Cumulative Markup % Formula
Initial Markup (IMU)
Balance Sheet
Gross Margin Return on Inventory Investment-GMROI Formula
35. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Retail Inventory Method
Fixed Liabilities
Fixed Assets
Current Ratio (CR) Formula
36. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Pricing Strategies: Price Zones
Cumulative Markup
Profit
Return on Assets
37. Ranges of prices that appeals for a particular group of consumers
Uncontrollable Errors
Gross Margin
Pricing Strategies: Price Zones
Fixed Liabilities
38. 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.
Debt Equity Ratio Formula
Acid test or Quick Ratio
Reasons for taking Markdowns
FIFO (First in - First out)
39. Financial debts incurred by a retailer
Assets Formula
Initial Markup (IMU)
Liabilities
Pricing Depends on 2 factors
40. 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
Return on Sales
Pricing Depends on 2 factors
Pricing Strategies: Price Lining
Price Sensitivity
41. First price or Manufacturers suggestet Retal Price (MSRP)
Promotion Errors
Markdown Cancellation ($) Formula
Original Price
Pricing Strategies: Price Zones
42. Total Assets/ Net Worth
Early Markdowns
Financial Leverage Ratio Formula
Net Profit
Forced Obsolescence
43. 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
Profit
Clearance Markdowns
Late Markdowns
Current Ratio (CR) Formula
44. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Acid test or Quick Ratio
Off-Price Markdown Percentage Formula
Profit
Markup % of Cost Formula
45. (gross margin % x Turnover) / (100%-markup %)
Markdown optimization
Markdown Cancellations
Current Ratio (CR) Formula
Gross Margin Return on Inventory Investment-GMROI Formula
46. 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
LIFO (last in - first out)
Fixed Assets
Ideal Markdown
Balance Sheet
47. Promotional markdown that involves selling at or near cost for promotional purposes
Loss-Leader
Net Sales
Return on Sales
Markup
48. 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
Forced Obsolescence
FIFO (First in - First out)
Fixed Liabilities
Markup % of Retail Formula
49. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Gross Margin
Return on Assets
Markdown Percentage
Current Ratio
50. 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.
Return on Net Worth
Pricing Strategies
Late Markdowns
Cost Complement Formula