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






2. Evaluates the managament of capital






3. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)






4. Sales for the period/ average inventory






5. What the retailer owns in monetary value






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






7. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.






8. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)






9. 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.






10. The energizing force that fuels and sustains our economic system






11. Improper displays - merchandise returns due to high pressure selling






12. Dollar markup ($)/ cost price ($)






13. 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






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






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






16. 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






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






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






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






20. 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.






21. Cost Price/ (100%-markup %)






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






23. 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.






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






25. Sales less cost of goods sold






26. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item






27. Total Expenses/ Net Sales






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






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






30. Price is changed (up or down)






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






32. 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.






33. 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






34. 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






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






36. 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






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






38. The weather - merchandise is shopworn - economic downturn






39. Costs involved in running the business






40. The higher the ratio the quicker current liabilities can be paid. This ratio also indicates the margin of safety a retailer has on hand to cover possible shrinkages






41. Usually lower than original - but held for longer period






42. Can be transformed simply and rapidly into cash






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






44. Cost + Markup






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






46. Buying errors - promotion errors - pricing errors - uncontrollable errors






47. Current Liabilites/ Net Worth






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






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






50. 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







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