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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. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Regular Price
FIFO (First in - First out)
Cost of Goods Sold (COGS) Formula
Clearance Markdowns
2. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Off-Price Markdowns
Markdown Cancellations
Cumulative Markup
Forced Obsolescence
3. Dollar markup ($)/ cost price ($)
Return on Sales
Profit and Loss Statement (P&L Statement)
Markup % of Cost Formula
Current Ratio
4. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Dollar Markdown Formula
Buying Errors
Promotional Markdown
5. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Gross Margin Return on Inventory Investment-GMROI Formula
Markdown Optimization
Markdown Cancellations
Depreciation
6. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Current Ratio (CR) Formula
Pricing Strategies: Price Ranges
Promotional Markdown
Initial Markup (IMU)
7. 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
Cumulative Markup % Formula
Debt Equity Ratio
Pricing Strategies: Price Lining
Cost of Goods Sold (COGS) Formula
8. (Cash + Accounts Receivable) / Current Liabilities
Markup
Current Liabilities
Reasons for taking Markdowns
Acid Test or Quick Ratio (QR) Formula
9. What the retailer owns in monetary value
Fixed Liabilities
Balance Sheet
Off-Price Markdown Percentage Formula
Assets
10. Total Markup on all goods on hand/ retail price of all goods on hand
Return on Sales
Debt Equity Ratio Formula
Cumulative Markup % Formula
Selling Price Formula
11. The prices from lowest to highest that are carried within a merchandise category
Pricing Strategies: Price Ranges
Initial Markup (IMU)
Clearance Markdowns
The Cost Method
12. 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.
Net Profit
Markup
Turnover Rate Formula
Accounts Receivable (AR)
13. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Assets Formula
Acid Test or Quick Ratio (QR) Formula
Sell-Through Rate
14. 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
Profit
Accounts Receivable (AR)
Operating Expenses
15. 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
Net Sales
Acid Test or Quick Ratio (QR) Formula
Sell-Through Rate
Net Profit
16. Cost Price/ (100%-markup %)
Retail Price Formula
Return on Sales
Early Markdowns
Retail Inventory Method
17. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Depreciation
Retail Price Formula
Loss-Leader
Forced Obsolescence
18. 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
Assets
Current Ratio
Sell-Through Rate
GMROII (Gross Margin Return on Inventory Investment)
19. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Buying Errors
Cumulative Markup
Return on Assets
Original Price
20. Revenues received by a retailer
Net Sales
Markdown Cancellations
Promotional Markdown
Financial Leverage Ratio
21. 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
Return on Sales
Balance Sheet
Ideal Markdown
22. 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)
Regular Price
Loss-Leader
Gross Margin Return on Inventory Investment-GMROI Formula
23. 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 % of Retail Formula
Original Price
FIFO (First in - First out)
5 Steps of Retail Inventory Method
24. The number of items remaining in stock x dollar markdown
Markup
Pricing Errors
Markdown Cancellation ($) Formula
Return on Net Worth (RONW) Formula
25. The retailers financial condition at a specific point in time
Current Liabilities
Balance Sheet
Debt Equity Ratio
Net Profit
26. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Profit Margin
Acid test or Quick Ratio
Retail Inventory Method
5 Steps of Retail Inventory Method
27. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Financial Leverage Ratio
Pricing Strategies: Price Lining
Cash Flow Formula
Turnover Rate Formula
28. Net Profit After Taxes/ Total Assets
Return on Assets (ROA) Formul
Markup % of Cost Formula
Financial Leverage Ratio Formula
Markdown Cancellation ($) Formula
29. Short time - like 1 or 2 day sales
Temporary Price Reduction
Assets
Profit and Loss Statement (P&L Statement)
Retail Price Formula
30. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Planned Initial Markup % Formula
Current Ratio
Turnover Rate Formula
Pricing Strategies: Price Lining
31. Current Assets/ Current Liabilities
Profit and Loss Statement (P&L Statement)
Return on Assets
Current Liabilities
Current Ratio (CR) Formula
32. Usually lower than original - but held for longer period
Loss-Leader
Forced Obsolescence
Regular Price
Pricing Strategies: Price Zones
33. 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
Assets
Net Profit
Sell-Through Rate
Profit Margin
34. Dollar markup ($)/ retail price ($)
Assets Formula
Markup % of Retail Formula
Assets
Original Price
35. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Pricing Depends on 2 factors
Expense Ratio Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Markdown
36. Original Retail price- markdown selling price
Initial Markup (IMU)
Dollar Markdown Formula
Uncontrollable Errors
Profit Margin Analysis Formula
37. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Depreciation
Selling Price Formula
Markdown Percentage
Off-Price Markdown Percentage Formula
38. Sales less cost of goods sold
Uncontrollable Errors
Fixed Assets
Initial Markup (IMU)
Gross Margin
39. Price Lining - price zones - price ranges
Selling Price Formula
Forced Obsolescence
Pricing Strategies
GMROII (Gross Margin Return on Inventory Investment)
40. The cost of merchandise that was sold (including the method that was used to determine cost)
Cost of Goods Sold
Acid test or Quick Ratio
Pricing Strategies: Price Zones
Markdown optimization
41. Assets collected within one year. Due to the widespread use of credit cards - AR for retailers has diminished with exceptions such as lay-a-way.
Reasons for taking Markdowns
Accounts Receivable (AR)
Markdown Cancellations
Uncontrollable Errors
42. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Operating Expenses
Off-Price Markdown Percentage Formula
Assets Formula
43. Price is changed (up or down)
Return on Sales
Planned Initial Markup % Formula
New Price
Pricing Strategies: Price Lining
44. Total Assets/ Net Worth
Sell-Through Rate
Pricing Strategies: Price Lining
Financial Leverage Ratio Formula
Regular Price
45. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Profit
Markup
Fixed Liabilities
Markdown Percentage Formula
46. Buying errors - promotion errors - pricing errors - uncontrollable errors
Inventory
Gross Margin
Reasons for taking Markdowns
Forced Obsolescence
47. The energizing force that fuels and sustains our economic system
Promotion Errors
Original Price
Cost of Goods Sold (COGS) Formula
Profit
48. First price or Manufacturers suggestet Retal Price (MSRP)
Uncontrollable Errors
Fixed Liabilities
Turnover Rate Formula
Original Price
49. Liabilities+ Owner's equity or net worth
Cash Flow Formula
Financial Leverage Ratio Formula
Depreciation
Assets Formula
50. Promotional markdown that involves selling at or near cost for promotional purposes
Pricing Strategies: Price Lining
Loss-Leader
FIFO (First in - First out)
Turnover Rate Formula