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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. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Markup
Markdown optimization
Markdown Cancellations
Reasons for taking Markdowns
2. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Net Sales
Gross Margin
Pricing Depends on 2 factors
3. Net Profit After Taxes/ Total Assets
Assets
Net Profit
Financial Leverage Ratio
Return on Assets (ROA) Formul
4. 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.
Off-Price Markdown Percentage Formula
Temporary Price Reduction
Expense Ratio
Promotion Errors
5. 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
Selling Price Formula
Retail Inventory Method
GMROII (Gross Margin Return on Inventory Investment)
6. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Current Liabilities
Off-Price Markdowns
Markdown Percentage
Markdown
7. Cost Price/ (100%-markup %)
Retail Price Formula
Pricing Strategies: Price Zones
Balance Sheet
Early Markdowns
8. 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
Pricing Strategies: Price Lining
Operating Expenses
Off-Price Markdowns
9. 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
Markdown Cancellation ($) Formula
Adage of Profitability for Retailers
Current Ratio
FIFO (First in - First out)
10. Net Profit After Taxes/ Net Worth
Markdown Percentage Formula
Return on Net Worth (RONW) Formula
Markdown Optimization
Current Ratio (CR) Formula
11. 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.
Promotion Errors
Cumulative Markup % Formula
Debt Equity Ratio
Acid test or Quick Ratio
12. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Adage of Profitability for Retailers
Cumulative Markup % Formula
Markdown optimization
13. Evaluates the managament of capital
Ideal Markdown
Buying Errors
Clearance Markdowns
Return on Sales
14. Short time - like 1 or 2 day sales
Turnover Rate Formula
Current Assets
Temporary Price Reduction
Profit and Loss Statement (P&L Statement)
15. Having the right merchandise - at the right time - for the right price - in the right place
The Cost Method
Adage of Profitability for Retailers
Off-Price Markdown Percentage Formula
Markup % of Retail Formula
16. What the retailer owns in monetary value
Expense Ratio Formula
Assets
Current Ratio (CR) Formula
Pricing Strategies
17. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Cost of Goods Sold
Operating Expenses
Net Profit
Promotional Markdown
18. Net Profit/ Net Sales
Profit
Operating Expenses
Profit Margin Analysis Formula
Pricing Depends on 2 factors
19. Price is changed (up or down)
Price Sensitivity
New Price
Sell-Through Rate
Markup % of Retail Formula
20. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown
Reasons for taking Markdowns
Pricing Strategies
Current Liabilities
21. Promotional markdown that involves selling at or near cost for promotional purposes
Ideal Markdown
Loss-Leader
Cost of Goods Sold
Markdown Percentage
22. Ranges of prices that appeals for a particular group of consumers
Dollar Markdown Formula
Off-Price Markdowns
Accounts Receivable (AR)
Pricing Strategies: Price Zones
23. One that is just enough to move the goods
Debt Equity Ratio Formula
Net Profit
Ideal Markdown
Debt Equity Ratio
24. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Pricing Depends on 2 factors
Reasons for taking Markdowns
Retail Inventory Method
Markdown Percentage Formula
25. 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
Return on Net Worth
GMROII (Gross Margin Return on Inventory Investment)
FIFO (First in - First out)
Planned Initial Markup % Formula
26. 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
New Price
Early Markdowns
Current Assets
Balance Sheet
27. First price or Manufacturers suggestet Retal Price (MSRP)
Pricing Strategies: Price Lining
Original Price
Forced Obsolescence
Cost of Goods Sold (COGS) Formula
28. Can be transformed simply and rapidly into cash
Net Profit
Cost Complement Formula
Ideal Markdown
Current Assets
29. 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.
Markup
Acid Test or Quick Ratio (QR) Formula
Current Ratio
Markdown Optimization
30. Dollar markup ($)/ retail price ($)
Markup % of Retail Formula
Promotional Markdown
Expense Ratio Formula
Net Sales
31. Cash Received by the retailer-cash leaving the retailer
Markup % of Retail Formula
Cash Flow Formula
Current Ratio
Late Markdowns
32. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Cost of Goods Sold (COGS) Formula
Return on Assets (ROA) Formul
Ideal Markdown
Dollar Markdown Formula
33. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Uncontrollable Errors
Markup
Gross Margin Return on Inventory Investment-GMROI Formula
Current Liabilities
34. The energizing force that fuels and sustains our economic system
Profit
Original Price
Adage of Profitability for Retailers
Pricing Strategies: Price Lining
35. Improper displays - merchandise returns due to high pressure selling
Financial Leverage Ratio Formula
Promotion Errors
Promotional Markdown
Expense Ratio Formula
36. 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
Retail Price Formula
Assets
Original Price
37. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Return on Assets
Profit
Planned Initial Markup % Formula
Cost of Goods Sold
38. 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
Markdown Percentage Formula
Acid test or Quick Ratio
LIFO (last in - first out)
Expense Ratio Formula
39. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Return on Net Worth (RONW) Formula
Temporary Price Reduction
Markup % of Cost Formula
Markdown Cancellations
40. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Errors
Markdown Cancellation ($) Formula
Operating Expenses
41. Price Lining - price zones - price ranges
Pricing Strategies
Depreciation
Return on Assets (ROA) Formul
Net Profit
42. Sales less cost of goods sold
Markdown Percentage
Cost of Goods Sold
Gross Margin
Promotion Errors
43. Current Liabilites/ Net Worth
Debt Equity Ratio Formula
Return on Sales
LIFO (last in - first out)
Expense Ratio
44. 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.
Liabilities
Cumulative Markup % Formula
Promotional Markdown
Profit and Loss Statement (P&L Statement)
45. The retailers financial condition at a specific point in time
Planned Initial Markup % Formula
Pricing Depends on 2 factors
Loss-Leader
Balance Sheet
46. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Cumulative Markup % Formula
Current Assets
Net Sales
47. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Pricing Errors
Sell-Through Rate
Markdown Percentage
Forced Obsolescence
48. Total Markup on all goods on hand/ retail price of all goods on hand
Buying Errors
Cumulative Markup % Formula
Depreciation
Markdown Cancellation ($) Formula
49. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Adage of Profitability for Retailers
Cost of Goods Sold
Acid Test or Quick Ratio (QR) Formula
50. Revenues received by a retailer
Inventory
Net Sales
Expense Ratio Formula
Pricing Strategies