Test your basic knowledge |

Retail Financials

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. Total Markup on all goods on hand/ retail price of all goods on hand






2. Original Retail price- markdown selling price






3. 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.






4. Costs involved in running the business






5. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)






6. Short time - like 1 or 2 day sales






7. Can be transformed simply and rapidly into cash






8. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.






9. The cost of merchandise that was sold (including the method that was used to determine cost)






10. The prices from lowest to highest that are carried within a merchandise category






11. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down






12. Net dollar markdown/ net dollar selling price






13. 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.






14. One that is just enough to move the goods






15. Dollar markup ($)/ retail price ($)






16. 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






17. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)






18. Improper displays - merchandise returns due to high pressure selling






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






20. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise






21. 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.






22. Net Profit After Taxes/ Net Worth






23. Net Profit/ Net Sales






24. Evaluates the managament of capital






25. 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






26. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model






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






28. Price is changed (up or down)






29. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit






30. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.






31. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down






32. Total Expenses/ Net Sales






33. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.






34. 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






35. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)






36. Liabilities+ Owner's equity or net worth






37. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.






38. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.






39. 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






40. Cash Received by the retailer-cash leaving the retailer






41. Net Profit After Taxes/ Total Assets






42. (Cash + Accounts Receivable) / Current Liabilities






43. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)






44. Total Assets/ Net Worth






45. 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.






46. 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.






47. Current Assets/ Current Liabilities






48. (gross margin % x Turnover) / (100%-markup %)






49. 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.






50. 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