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Test your basic knowledge |
Retail Financials
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. Net Profit After Taxes/ Total Assets
Current Ratio (CR) Formula
Debt Equity Ratio Formula
Return on Assets (ROA) Formul
Markdown Optimization
2. Cost Price/ (100%-markup %)
Retail Inventory Method
Retail Price Formula
Acid test or Quick Ratio
Cumulative Markup
3. 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
Markdown Cancellations
Turnover Rate Formula
Price Sensitivity
Late Markdowns
4. 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)
Late Markdowns
Pricing Errors
Pricing Strategies: Price Zones
5. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Temporary Price Reduction
Expense Ratio Formula
Cash Flow Formula
6. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Debt Equity Ratio
Assets
Markdown Cancellations
Accounts Receivable (AR)
7. Having the right merchandise - at the right time - for the right price - in the right place
Off-Price Markdowns
Current Ratio
Markdown Percentage Formula
Adage of Profitability for Retailers
8. 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
Expense Ratio
Profit Margin
LIFO (last in - first out)
Inventory
9. Price is changed (up or down)
New Price
Cumulative Markup % Formula
Markdown Cancellations
Forced Obsolescence
10. 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.
Promotional Markdown
Promotion Errors
Markdown Percentage Formula
Pricing Strategies: Price Lining
11. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Fixed Assets
Pricing Strategies
Fixed Liabilities
Return on Assets
12. 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
Pricing Depends on 2 factors
Current Ratio (CR) Formula
Ideal Markdown
13. The cost of merchandise that was sold (including the method that was used to determine cost)
Cost of Goods Sold
Markdown Percentage Formula
Dollar Markdown Formula
Debt Equity Ratio Formula
14. What the retailer owns in monetary value
Price Sensitivity
Assets
Retail Price Formula
Markdown optimization
15. Sales less cost of goods sold
Cash Flow Formula
Selling Price Formula
Gross Margin
Pricing Strategies: Price Zones
16. The prices from lowest to highest that are carried within a merchandise category
Dollar Markdown Formula
Fixed Assets
Pricing Strategies: Price Ranges
Promotion Errors
17. The weather - merchandise is shopworn - economic downturn
Assets Formula
Debt Equity Ratio Formula
Uncontrollable Errors
Pricing Strategies
18. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Forced Obsolescence
Profit
Fixed Liabilities
Regular Price
19. 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.
Profit Margin
New Price
Markup
Assets Formula
20. Buying errors - promotion errors - pricing errors - uncontrollable errors
Markdown optimization
Current Ratio
Inventory
Reasons for taking Markdowns
21. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
LIFO (last in - first out)
Net Profit
Buying Errors
Accounts Receivable (AR)
22. First price or Manufacturers suggestet Retal Price (MSRP)
Current Assets
Markup % of Retail Formula
Original Price
Markdown optimization
23. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Return on Assets
Cost Complement Formula
Adage of Profitability for Retailers
GMROII (Gross Margin Return on Inventory Investment)
24. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Pricing Depends on 2 factors
Balance Sheet
Pricing Errors
Forced Obsolescence
25. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Planned Initial Markup % Formula
Depreciation
Fixed Liabilities
Profit and Loss Statement (P&L Statement)
26. 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
FIFO (First in - First out)
Return on Net Worth (RONW) Formula
Price Sensitivity
LIFO (last in - first out)
27. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
FIFO (First in - First out)
Liabilities
Markdown Percentage Formula
Current Liabilities
28. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
5 Steps of Retail Inventory Method
Late Markdowns
Fixed Assets
Clearance Markdowns
29. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Ideal Markdown
Balance Sheet
Cost of Goods Sold
30. Total Assets/ Net Worth
Off-Price Markdowns
Ideal Markdown
Financial Leverage Ratio Formula
Expense Ratio
31. 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
Markdown Optimization
Return on Net Worth
Temporary Price Reduction
GMROII (Gross Margin Return on Inventory Investment)
32. Original Retail price- markdown selling price
Pricing Strategies: Price Lining
Liabilities
Dollar Markdown Formula
Planned Initial Markup % Formula
33. Costs involved in running the business
Initial Markup (IMU)
Return on Sales
Retail Price Formula
Operating Expenses
34. Total Markup on all goods on hand/ retail price of all goods on hand
Pricing Strategies: Price Ranges
Cumulative Markup % Formula
Profit Margin
Selling Price Formula
35. Improper displays - merchandise returns due to high pressure selling
Sell-Through Rate
Current Liabilities
Accounts Receivable (AR)
Promotion Errors
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
Price Sensitivity
Debt Equity Ratio
Clearance Markdowns
Profit Margin
37. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Buying Errors
Acid Test or Quick Ratio (QR) Formula
FIFO (First in - First out)
Markdown
38. 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.
Inventory
Off-Price Markdown Percentage Formula
Initial Markup (IMU)
Markdown Percentage Formula
39. Total Expenses/ Net Sales
FIFO (First in - First out)
Expense Ratio Formula
Markdown
Markdown Optimization
40. Financial debts incurred by a retailer
Accounts Receivable (AR)
FIFO (First in - First out)
Liabilities
Forced Obsolescence
41. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Current Ratio
Late Markdowns
Pricing Depends on 2 factors
Pricing Strategies: Price Lining
42. 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
Markdown optimization
Pricing Strategies: Price Lining
Return on Assets (ROA) Formul
43. Dollar markup ($)/ retail price ($)
Fixed Liabilities
Assets
Markdown Percentage Formula
Markup % of Retail Formula
44. Cost + Markup
Debt Equity Ratio Formula
Selling Price Formula
Assets Formula
Liabilities
45. 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.
Sell-Through Rate
Acid test or Quick Ratio
Profit
Return on Net Worth (RONW) Formula
46. Liabilities+ Owner's equity or net worth
Assets Formula
Accounts Receivable (AR)
Uncontrollable Errors
Promotion Errors
47. (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%
Planned Initial Markup % Formula
Cost of Goods Sold (COGS) Formula
Markdown Percentage Formula
Profit
48. The number of items remaining in stock x dollar markdown
LIFO (last in - first out)
Uncontrollable Errors
Markdown Cancellation ($) Formula
Inventory
49. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Adage of Profitability for Retailers
Promotional Markdown
Off-Price Markdowns
Accounts Receivable (AR)
50. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Markup
Assets
Pricing Strategies: Price Lining
Profit
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