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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. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Regular Price
Loss-Leader
Markdown Optimization
Current Liabilities
2. 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.
Expense Ratio
Retail Inventory Method
Promotional Markdown
Return on Assets (ROA) Formul
3. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Retail Price Formula
Current Liabilities
Cumulative Markup
Gross Margin Return on Inventory Investment-GMROI Formula
4. Total Assets/ Net Worth
Return on Assets
Loss-Leader
Financial Leverage Ratio Formula
Cost of Goods Sold
5. 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
New Price
Clearance Markdowns
Sell-Through Rate
GMROII (Gross Margin Return on Inventory Investment)
6. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
GMROII (Gross Margin Return on Inventory Investment)
Return on Assets (ROA) Formul
Financial Leverage Ratio Formula
7. The energizing force that fuels and sustains our economic system
Profit
Dollar Markdown Formula
Pricing Strategies: Price Lining
GMROII (Gross Margin Return on Inventory Investment)
8. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Current Liabilities
Return on Assets (ROA) Formul
Retail Inventory Method
Initial Markup (IMU)
9. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Pricing Strategies: Price Lining
Selling Price Formula
Profit and Loss Statement (P&L Statement)
10. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Pricing Strategies
Inventory
Markdown optimization
Balance Sheet
11. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Clearance Markdowns
Pricing Strategies: Price Lining
Net Sales
Assets
12. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Pricing Depends on 2 factors
Fixed Liabilities
Cost of Goods Sold (COGS) Formula
Markdown Cancellations
13. 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.
GMROII (Gross Margin Return on Inventory Investment)
The Cost Method
Operating Expenses
Markup
14. 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.
Fixed Assets
Pricing Depends on 2 factors
Late Markdowns
Cash Flow Formula
15. 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
FIFO (First in - First out)
Current Ratio (CR) Formula
Markdown Percentage Formula
Markdown optimization
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
Debt Equity Ratio
Forced Obsolescence
Gross Margin Return on Inventory Investment-GMROI Formula
Clearance Markdowns
17. 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
Early Markdowns
Off-Price Markdown Percentage Formula
Profit Margin
Debt Equity Ratio
18. Current Liabilites/ Net Worth
Net Sales
Sell-Through Rate
Debt Equity Ratio Formula
Retail Inventory Method
19. The number of items remaining in stock x dollar markdown
Gross Margin Return on Inventory Investment-GMROI Formula
Debt Equity Ratio
Markdown Percentage
Markdown Cancellation ($) Formula
20. Dollar markup ($)/ retail price ($)
Current Ratio
Debt Equity Ratio
Cumulative Markup % Formula
Markup % of Retail Formula
21. Cost + Markup
Assets
Buying Errors
Selling Price Formula
Return on Sales
22. Usually lower than original - but held for longer period
Forced Obsolescence
Markdown
Regular Price
Pricing Strategies
23. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Liabilities
Ideal Markdown
5 Steps of Retail Inventory Method
24. 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.
Markdown Cancellations
Dollar Markdown Formula
Selling Price Formula
Expense Ratio
25. Priced too high initially - priced too low - selling price of competitors
Markdown
Markdown Cancellations
Initial Markup (IMU)
Pricing Errors
26. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Markdown Optimization
Markdown Cancellations
Pricing Strategies
Depreciation
27. The cost of merchandise that was sold (including the method that was used to determine cost)
Pricing Strategies: Price Ranges
Operating Expenses
Cost of Goods Sold
Financial Leverage Ratio Formula
28. 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)
Financial Leverage Ratio
Current Ratio
5 Steps of Retail Inventory Method
29. Cost Price/ (100%-markup %)
Pricing Depends on 2 factors
Pricing Strategies: Price Ranges
Pricing Errors
Retail Price Formula
30. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Adage of Profitability for Retailers
Markdown Cancellations
Original Price
Markdown
31. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Profit Margin
Turnover Rate Formula
FIFO (First in - First out)
Off-Price Markdown Percentage Formula
32. What the retailer owns in monetary value
Return on Net Worth (RONW) Formula
Current Ratio
Assets
Forced Obsolescence
33. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Markup
GMROII (Gross Margin Return on Inventory Investment)
Return on Assets
34. 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
Expense Ratio
Markup % of Retail Formula
Retail Inventory Method
35. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Return on Assets
FIFO (First in - First out)
Markdown Optimization
Off-Price Markdowns
36. Financial debts incurred by a retailer
Pricing Strategies: Price Zones
Operating Expenses
Liabilities
GMROII (Gross Margin Return on Inventory Investment)
37. (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%
Markup % of Retail Formula
Return on Assets (ROA) Formul
FIFO (First in - First out)
Planned Initial Markup % Formula
38. Dollar markup ($)/ cost price ($)
Fixed Liabilities
Acid Test or Quick Ratio (QR) Formula
Markup % of Cost Formula
Depreciation
39. Can be transformed simply and rapidly into cash
Buying Errors
Markdown optimization
Profit
Current Assets
40. Inventory Valuation Method where the cost to the retailer of each item purchased from a vendor is entered in the accounting system and/or placed on the merchandise item or on it's package. At times - freight charges are built into the cost. Coding of
Pricing Strategies: Price Zones
Adage of Profitability for Retailers
Retail Inventory Method
The Cost Method
41. Liabilities+ Owner's equity or net worth
Profit Margin
Return on Sales
Fixed Liabilities
Assets Formula
42. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
The Cost Method
Retail Price Formula
Selling Price Formula
43. In the Cost Method. Merchandise most recently purchased is assumed to have been sold first. Therefore - the ending inventory reflects the items in stock for the longest period of time. Produces lowest ending inventory value and highest cost of goods
Dollar Markdown Formula
Planned Initial Markup % Formula
LIFO (last in - first out)
Markdown Cancellation ($) Formula
44. One that is just enough to move the goods
Ideal Markdown
Uncontrollable Errors
Pricing Strategies: Price Zones
Selling Price Formula
45. 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
Fixed Assets
Debt Equity Ratio Formula
5 Steps of Retail Inventory Method
Late Markdowns
46. 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)
Profit and Loss Statement (P&L Statement)
Retail Price Formula
Cost Complement Formula
47. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Acid Test or Quick Ratio (QR) Formula
Net Profit
Promotion Errors
Markup
48. 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
Accounts Receivable (AR)
Retail Inventory Method
Operating Expenses
Current Ratio
49. Sales less cost of goods sold
Current Ratio
Markdown Percentage Formula
Pricing Strategies
Gross Margin
50. Sales for the period/ average inventory
Adage of Profitability for Retailers
Return on Assets
Turnover Rate Formula
Off-Price Markdown Percentage Formula