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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. 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
Current Liabilities
Clearance Markdowns
Forced Obsolescence
Return on Sales
2. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Current Ratio
Net Profit
Buying Errors
3. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Original Price
Operating Expenses
Cost Complement Formula
Depreciation
4. Current Assets/ Current Liabilities
Return on Net Worth (RONW) Formula
Markdown Cancellations
Current Ratio (CR) Formula
Return on Sales
5. Original Retail price- markdown selling price
Pricing Strategies: Price Ranges
Profit
Operating Expenses
Dollar Markdown Formula
6. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Pricing Errors
Return on Assets (ROA) Formul
Depreciation
GMROII (Gross Margin Return on Inventory Investment)
7. Price Lining - price zones - price ranges
Pricing Strategies
Markdown Cancellation ($) Formula
Return on Assets
Dollar Markdown Formula
8. 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.
Acid test or Quick Ratio
Balance Sheet
Sell-Through Rate
Planned Initial Markup % Formula
9. Total Expenses/ Net Sales
Pricing Strategies: Price Zones
Cumulative Markup
Expense Ratio Formula
Profit
10. Financial debts incurred by a retailer
Pricing Strategies: Price Ranges
Liabilities
Cumulative Markup
Assets Formula
11. 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.
Late Markdowns
Expense Ratio
Promotion Errors
Markdown
12. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Liabilities
LIFO (last in - first out)
Markdown
13. 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
Assets Formula
Markdown
Profit and Loss Statement (P&L Statement)
14. Sales for the period/ average inventory
Net Sales
Pricing Strategies: Price Ranges
Turnover Rate Formula
Assets
15. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Retail Price Formula
Markdown
Sell-Through Rate
Liabilities
16. 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
Regular Price
Off-Price Markdown Percentage Formula
5 Steps of Retail Inventory Method
GMROII (Gross Margin Return on Inventory Investment)
17. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Selling Price Formula
Return on Net Worth
Liabilities
18. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Fixed Liabilities
Return on Net Worth
Net Profit
Fixed Assets
19. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Net Profit
Profit and Loss Statement (P&L Statement)
Expense Ratio
20. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Financial Leverage Ratio
GMROII (Gross Margin Return on Inventory Investment)
Net Profit
FIFO (First in - First out)
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
Profit
Buying Errors
The Cost Method
Assets Formula
22. 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
Acid test or Quick Ratio
Current Ratio
Pricing Strategies
Pricing Errors
23. 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.
The Cost Method
Debt Equity Ratio
Acid Test or Quick Ratio (QR) Formula
Markup
24. The energizing force that fuels and sustains our economic system
The Cost Method
Return on Net Worth (RONW) Formula
Cost Complement Formula
Profit
25. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Original Price
Balance Sheet
Financial Leverage Ratio
Debt Equity Ratio
26. 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
Current Ratio
The Cost Method
Assets
27. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Expense Ratio Formula
Cost of Goods Sold (COGS) Formula
Sell-Through Rate
Current Liabilities
28. Cost + Markup
Clearance Markdowns
Selling Price Formula
Current Ratio
Gross Margin Return on Inventory Investment-GMROI Formula
29. Priced too high initially - priced too low - selling price of competitors
Expense Ratio
Markdown Percentage
Pricing Errors
Return on Net Worth
30. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Retail Inventory Method
Profit Margin Analysis Formula
Depreciation
Pricing Strategies
31. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Balance Sheet
Pricing Errors
Pricing Strategies: Price Ranges
Initial Markup (IMU)
32. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Reasons for taking Markdowns
Current Liabilities
Markdown Cancellations
Retail Inventory Method
33. Net Profit/ Net Sales
Cost Complement Formula
Profit Margin Analysis Formula
Markup % of Retail Formula
Cumulative Markup
34. (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%
Assets Formula
Markup % of Cost Formula
Planned Initial Markup % Formula
Markdown optimization
35. Usually lower than original - but held for longer period
Regular Price
Original Price
Adage of Profitability for Retailers
Markup % of Cost Formula
36. 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
Return on Net Worth
Profit Margin
Inventory
Temporary Price Reduction
37. 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
5 Steps of Retail Inventory Method
Temporary Price Reduction
Promotional Markdown
38. First price or Manufacturers suggestet Retal Price (MSRP)
Profit and Loss Statement (P&L Statement)
Original Price
Adage of Profitability for Retailers
Pricing Errors
39. Total Markup on all goods on hand/ retail price of all goods on hand
Original Price
Cumulative Markup % Formula
Promotional Markdown
Retail Inventory Method
40. 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
Return on Assets (ROA) Formul
Off-Price Markdown Percentage Formula
Liabilities
41. Promotional markdown that involves selling at or near cost for promotional purposes
Liabilities
Loss-Leader
Acid test or Quick Ratio
Profit Margin Analysis Formula
42. Evaluates the managament of capital
Financial Leverage Ratio Formula
Return on Sales
Markdown optimization
Debt Equity Ratio
43. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Acid test or Quick Ratio
Pricing Depends on 2 factors
Temporary Price Reduction
44. 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 Cancellation ($) Formula
Sell-Through Rate
Operating Expenses
Debt Equity Ratio
45. Ranges of prices that appeals for a particular group of consumers
Cumulative Markup
Markdown Cancellation ($) Formula
Return on Assets (ROA) Formul
Pricing Strategies: Price Zones
46. 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
Cost Complement Formula
Depreciation
FIFO (First in - First out)
47. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Promotional Markdown
Retail Price Formula
Buying Errors
5 Steps of Retail Inventory Method
48. Net Profit After Taxes/ Total Assets
Cumulative Markup
Price Sensitivity
Return on Assets (ROA) Formul
FIFO (First in - First out)
49. The weather - merchandise is shopworn - economic downturn
Profit
Dollar Markdown Formula
Uncontrollable Errors
Cumulative Markup
50. (gross margin % x Turnover) / (100%-markup %)
Debt Equity Ratio
Buying Errors
Gross Margin Return on Inventory Investment-GMROI Formula
Early Markdowns