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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. Evaluates the managament of capital
Return on Net Worth (RONW) Formula
Net Sales
Return on Sales
Pricing Strategies: Price Lining
2. The retailers financial condition at a specific point in time
Regular Price
Balance Sheet
Forced Obsolescence
Profit
3. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold
Return on Net Worth (RONW) Formula
Cost of Goods Sold (COGS) Formula
Initial Markup (IMU)
4. Dollar markup ($)/ retail price ($)
Markdown
Promotion Errors
Retail Price Formula
Markup % of Retail Formula
5. 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)
Net Sales
Cost of Goods Sold
Markdown Cancellations
6. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Loss-Leader
Sell-Through Rate
Return on Assets
Pricing Strategies: Price Lining
7. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Original Price
Profit and Loss Statement (P&L Statement)
Cost Complement Formula
Markdown Percentage
8. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Forced Obsolescence
Acid test or Quick Ratio
Adage of Profitability for Retailers
Ideal Markdown
9. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Financial Leverage Ratio
Late Markdowns
Markdown Cancellations
Markdown Cancellation ($) Formula
10. One that is just enough to move the goods
Markdown
Ideal Markdown
Financial Leverage Ratio Formula
Price Sensitivity
11. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Depreciation
Markup % of Cost Formula
Return on Assets
Fixed Assets
12. Cash Received by the retailer-cash leaving the retailer
GMROII (Gross Margin Return on Inventory Investment)
Cash Flow Formula
Acid test or Quick Ratio
Current Assets
13. 1. Determine merchandise available for sale at both cost and retail prices. 2.Calculate the cost to retail complement or percentage relationship of the cost of merchandise to the selling price. 3. Subtract markdowns taken during the period. 4. Determ
5 Steps of Retail Inventory Method
Financial Leverage Ratio Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Profit and Loss Statement (P&L Statement)
14. The prices from lowest to highest that are carried within a merchandise category
Return on Net Worth (RONW) Formula
Debt Equity Ratio Formula
Pricing Strategies: Price Zones
Pricing Strategies: Price Ranges
15. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Liabilities
Adage of Profitability for Retailers
Sell-Through Rate
Reasons for taking Markdowns
16. Ensures that there is enough cash to pay debts. Any time the ratio is colse to 1 - the retailer is said to be in a liquid position.
Planned Initial Markup % Formula
Fixed Liabilities
Acid test or Quick Ratio
Loss-Leader
17. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Financial Leverage Ratio
Return on Sales
Dollar Markdown Formula
Debt Equity Ratio Formula
18. The number of items remaining in stock x dollar markdown
Temporary Price Reduction
Markup % of Retail Formula
Markdown Cancellation ($) Formula
Dollar Markdown Formula
19. 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
Ideal Markdown
Current Ratio
Net Profit
Cumulative Markup % Formula
20. 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
Pricing Strategies: Price Zones
Liabilities
Markup % of Cost Formula
21. Cost + Markup
Acid test or Quick Ratio
Selling Price Formula
Markdown
Sell-Through Rate
22. First price or Manufacturers suggestet Retal Price (MSRP)
Return on Net Worth (RONW) Formula
Current Liabilities
Markup
Original Price
23. Costs involved in running the business
Operating Expenses
Markup
Markdown Percentage Formula
Return on Assets (ROA) Formul
24. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Cost Complement Formula
Selling Price Formula
Off-Price Markdown Percentage Formula
Markup
25. Current Liabilites/ Net Worth
Assets Formula
LIFO (last in - first out)
Debt Equity Ratio Formula
Profit and Loss Statement (P&L Statement)
26. Dollar markup ($)/ cost price ($)
Markdown
Markup % of Cost Formula
5 Steps of Retail Inventory Method
Current Liabilities
27. 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
Accounts Receivable (AR)
Cumulative Markup % Formula
Fixed Assets
28. Can be transformed simply and rapidly into cash
Current Assets
Selling Price Formula
Ideal Markdown
Fixed Assets
29. Net Profit After Taxes/ Total Assets
Initial Markup (IMU)
Liabilities
Return on Assets (ROA) Formul
Gross Margin
30. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Planned Initial Markup % Formula
Return on Net Worth
Current Liabilities
Fixed Liabilities
31. Sales less cost of goods sold
GMROII (Gross Margin Return on Inventory Investment)
Markdown optimization
Gross Margin
Uncontrollable Errors
32. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Assets Formula
Early Markdowns
Initial Markup (IMU)
Turnover Rate Formula
33. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Original Price
Cumulative Markup % Formula
Temporary Price Reduction
34. Total Expenses/ Net Sales
Assets Formula
Clearance Markdowns
Expense Ratio Formula
Current Ratio
35. 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
Clearance Markdowns
Sell-Through Rate
New Price
Loss-Leader
36. 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
Uncontrollable Errors
Liabilities
Debt Equity Ratio
37. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Fixed Liabilities
Depreciation
Return on Net Worth (RONW) Formula
Pricing Strategies: Price Zones
38. 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
Markup % of Retail Formula
Reasons for taking Markdowns
Pricing Strategies: Price Ranges
39. 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
Early Markdowns
Pricing Depends on 2 factors
Assets Formula
Gross Margin
40. Promotional markdown that involves selling at or near cost for promotional purposes
Pricing Strategies: Price Ranges
Current Liabilities
Loss-Leader
Depreciation
41. Improper displays - merchandise returns due to high pressure selling
Pricing Depends on 2 factors
Promotion Errors
Planned Initial Markup % Formula
Markdown optimization
42. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Debt Equity Ratio Formula
Turnover Rate Formula
Markdown Percentage Formula
Markdown optimization
43. Net dollar markdown/ net dollar selling price
Financial Leverage Ratio
Planned Initial Markup % Formula
Markdown Percentage Formula
Current Ratio (CR) Formula
44. 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.
Selling Price Formula
Accounts Receivable (AR)
Inventory
The Cost Method
45. 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.
Net Sales
Retail Inventory Method
Late Markdowns
Expense Ratio
46. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Cumulative Markup
Temporary Price Reduction
Net Sales
47. The energizing force that fuels and sustains our economic system
Retail Inventory Method
Profit
Current Assets
Financial Leverage Ratio Formula
48. Having the right merchandise - at the right time - for the right price - in the right place
5 Steps of Retail Inventory Method
Markup % of Cost Formula
Adage of Profitability for Retailers
Acid test or Quick Ratio
49. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Turnover Rate Formula
Reasons for taking Markdowns
Current Ratio
50. Ranges of prices that appeals for a particular group of consumers
Loss-Leader
FIFO (First in - First out)
Assets
Pricing Strategies: Price Zones