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Retail Financials

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. 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






2. Short time - like 1 or 2 day sales






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






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






5. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory






6. The weather - merchandise is shopworn - economic downturn






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






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






9. Net Profit After Taxes/ Total Assets






10. Price is changed (up or down)






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






12. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.






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






14. 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






15. Revenues received by a retailer






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






17. Promotional markdown that involves selling at or near cost for promotional purposes






18. 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.






19. Priced too high initially - priced too low - selling price of competitors






20. The number of items remaining in stock x dollar markdown






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






22. What the retailer owns in monetary value






23. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented






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






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. 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






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






28. Evaluates the managament of capital






29. 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.






30. 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.






31. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)






32. 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






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






34. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.






35. 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.






36. First price or Manufacturers suggestet Retal Price (MSRP)






37. 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






38. 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






39. Buying errors - promotion errors - pricing errors - uncontrollable errors






40. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes






41. Sales for the period/ average inventory






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






43. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)






44. Net Profit After Taxes/ Net Worth






45. Can be transformed simply and rapidly into cash






46. Current Liabilites/ Net Worth






47. Net dollar markdown/ net dollar selling price






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






49. Ranges of prices that appeals for a particular group of consumers






50. Sales less cost of goods sold







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