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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. Liabilities+ Owner's equity or net worth
Assets Formula
Cash Flow Formula
Pricing Errors
Debt Equity Ratio Formula
2. Ranges of prices that appeals for a particular group of consumers
Depreciation
Pricing Strategies: Price Zones
Debt Equity Ratio Formula
Off-Price Markdowns
3. One that is just enough to move the goods
Early Markdowns
Buying Errors
Ideal Markdown
Promotion Errors
4. Total Expenses/ Net Sales
Net Profit
Inventory
Expense Ratio Formula
Markup % of Retail Formula
5. Sales for the period/ average inventory
Turnover Rate Formula
Loss-Leader
Operating Expenses
Debt Equity Ratio
6. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Turnover Rate Formula
Assets
Dollar Markdown Formula
7. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Loss-Leader
Operating Expenses
Markup % of Cost Formula
Markdown Cancellations
8. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Expense Ratio
Accounts Receivable (AR)
Off-Price Markdown Percentage Formula
Retail Price Formula
9. 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
Assets Formula
Clearance Markdowns
Regular Price
Profit
10. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Forced Obsolescence
Accounts Receivable (AR)
Sell-Through Rate
Return on Assets
11. Dollar markup ($)/ cost price ($)
The Cost Method
Markup % of Cost Formula
Assets
FIFO (First in - First out)
12. 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
New Price
Profit Margin Analysis Formula
Temporary Price Reduction
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
Regular Price
5 Steps of Retail Inventory Method
Reasons for taking Markdowns
Cash Flow Formula
14. 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
FIFO (First in - First out)
Turnover Rate Formula
GMROII (Gross Margin Return on Inventory Investment)
Return on Net Worth (RONW) Formula
15. Can be transformed simply and rapidly into cash
Sell-Through Rate
Markdown Cancellations
Current Assets
Turnover Rate Formula
16. Financial debts incurred by a retailer
Off-Price Markdowns
Markdown Percentage
Liabilities
Markdown Cancellations
17. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Forced Obsolescence
Markdown
Dollar Markdown Formula
Selling Price Formula
18. Short time - like 1 or 2 day sales
Temporary Price Reduction
Cumulative Markup % Formula
Profit
Debt Equity Ratio Formula
19. Price is changed (up or down)
Cost Complement Formula
Return on Net Worth
New Price
Cost of Goods Sold (COGS) Formula
20. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
The Cost Method
Financial Leverage Ratio
Selling Price Formula
Fixed Assets
21. The cost of merchandise that was sold (including the method that was used to determine cost)
New Price
Acid test or Quick Ratio
Cost of Goods Sold
Temporary Price Reduction
22. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Markdown optimization
Cost of Goods Sold (COGS) Formula
5 Steps of Retail Inventory Method
New Price
23. 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.
Expense Ratio
Markdown Cancellations
Pricing Strategies: Price Lining
Markdown Percentage
24. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Clearance Markdowns
Financial Leverage Ratio
Pricing Strategies: Price Ranges
Debt Equity Ratio Formula
25. Net Profit After Taxes/ Net Worth
Markdown Cancellation ($) Formula
Return on Net Worth (RONW) Formula
The Cost Method
Initial Markup (IMU)
26. Current Liabilites/ Net Worth
Markdown Optimization
Debt Equity Ratio Formula
Markdown
Balance Sheet
27. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Ratio
Markdown optimization
FIFO (First in - First out)
Current Liabilities
28. Buying errors - promotion errors - pricing errors - uncontrollable errors
Profit Margin
Reasons for taking Markdowns
Markdown Optimization
Debt Equity Ratio Formula
29. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Off-Price Markdowns
The Cost Method
Cost Complement Formula
Initial Markup (IMU)
30. Priced too high initially - priced too low - selling price of competitors
Profit
Off-Price Markdowns
Assets Formula
Pricing Errors
31. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Buying Errors
Balance Sheet
5 Steps of Retail Inventory Method
GMROII (Gross Margin Return on Inventory Investment)
32. 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.
Initial Markup (IMU)
Inventory
Current Ratio (CR) Formula
Markup
33. Cash Received by the retailer-cash leaving the retailer
Operating Expenses
Fixed Assets
Price Sensitivity
Cash Flow Formula
34. 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
Fixed Assets
Early Markdowns
Cumulative Markup % Formula
Expense Ratio Formula
35. What the retailer owns in monetary value
Assets
Gross Margin Return on Inventory Investment-GMROI Formula
Late Markdowns
Expense Ratio
36. Evaluates the managament of capital
Markup % of Cost Formula
Selling Price Formula
Return on Sales
Fixed Liabilities
37. Cost + Markup
Profit Margin
Net Sales
Markdown Optimization
Selling Price Formula
38. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Markdown optimization
Uncontrollable Errors
New Price
Profit and Loss Statement (P&L Statement)
39. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Pricing Strategies: Price Ranges
Markdown
Current Ratio
Return on Assets
40. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Liabilities
Balance Sheet
Assets
Markdown Percentage
41. 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
Cost of Goods Sold (COGS) Formula
Pricing Strategies: Price Zones
Retail Price Formula
42. The energizing force that fuels and sustains our economic system
Profit
Buying Errors
Promotion Errors
Regular Price
43. Costs involved in running the business
Return on Assets (ROA) Formul
Operating Expenses
Profit and Loss Statement (P&L Statement)
The Cost Method
44. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Promotion Errors
Profit Margin Analysis Formula
Initial Markup (IMU)
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.
Pricing Strategies
Return on Net Worth
Pricing Strategies: Price Ranges
Acid test or Quick Ratio
46. 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
Financial Leverage Ratio
Early Markdowns
The Cost Method
Initial Markup (IMU)
47. 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
Acid test or Quick Ratio
FIFO (First in - First out)
Price Sensitivity
Current Ratio
48. Revenues received by a retailer
Markup % of Retail Formula
Pricing Strategies: Price Lining
Markdown Cancellation ($) Formula
Net Sales
49. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Markdown optimization
Adage of Profitability for Retailers
Sell-Through Rate
50. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Current Ratio
Liabilities
Profit and Loss Statement (P&L Statement)