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Test your basic knowledge |
Retail Financials
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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. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Initial Markup (IMU)
Profit Margin
Debt Equity Ratio Formula
Current Liabilities
2. The weather - merchandise is shopworn - economic downturn
Uncontrollable Errors
Return on Assets
Profit Margin Analysis Formula
Cumulative Markup
3. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Return on Assets (ROA) Formul
Current Assets
Planned Initial Markup % Formula
4. Current Liabilites/ Net Worth
Cumulative Markup
Profit
Acid Test or Quick Ratio (QR) Formula
Debt Equity Ratio Formula
5. 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
FIFO (First in - First out)
Financial Leverage Ratio Formula
Retail Inventory Method
Return on Assets
6. 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
Profit and Loss Statement (P&L Statement)
Markdown
5 Steps of Retail Inventory Method
Sell-Through Rate
7. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Sell-Through Rate
Pricing Strategies
Off-Price Markdown Percentage Formula
Profit Margin Analysis Formula
8. Sales for the period/ average inventory
Retail Inventory Method
Turnover Rate Formula
Buying Errors
Debt Equity Ratio
9. 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
Pricing Depends on 2 factors
Markup % of Cost Formula
Financial Leverage Ratio
10. Price Lining - price zones - price ranges
Pricing Strategies
Markdown Optimization
Markup % of Cost Formula
Retail Inventory Method
11. 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.
Markdown Cancellations
Markup
Accounts Receivable (AR)
5 Steps of Retail Inventory Method
12. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Financial Leverage Ratio Formula
Loss-Leader
Off-Price Markdowns
Forced Obsolescence
13. Liabilities+ Owner's equity or net worth
Net Profit
Assets Formula
Initial Markup (IMU)
Return on Assets
14. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
FIFO (First in - First out)
Financial Leverage Ratio
Dollar Markdown Formula
Markdown optimization
15. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Fixed Assets
Promotion Errors
Assets Formula
Pricing Depends on 2 factors
16. Current Assets/ Current Liabilities
Retail Inventory Method
Current Ratio (CR) Formula
Accounts Receivable (AR)
Pricing Strategies: Price Lining
17. Net dollar markdown/ net dollar selling price
Clearance Markdowns
Markdown Percentage Formula
Inventory
Financial Leverage Ratio Formula
18. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Cost of Goods Sold
Retail Inventory Method
Markdown Cancellations
Promotion Errors
19. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
Inventory
Net Profit
Pricing Strategies: Price Ranges
20. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Markup % of Cost Formula
Ideal Markdown
Cumulative Markup
Return on Assets
21. 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
Gross Margin
5 Steps of Retail Inventory Method
Cost Complement Formula
Early Markdowns
22. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Retail Inventory Method
Net Sales
Sell-Through Rate
23. Improper displays - merchandise returns due to high pressure selling
Forced Obsolescence
Promotion Errors
Sell-Through Rate
Buying Errors
24. 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
Current Ratio
Acid test or Quick Ratio
Price Sensitivity
Pricing Depends on 2 factors
25. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Fixed Assets
Fixed Liabilities
Buying Errors
Markdown optimization
26. Usually lower than original - but held for longer period
Sell-Through Rate
Regular Price
Fixed Liabilities
Financial Leverage Ratio
27. 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
LIFO (last in - first out)
Cost Complement Formula
New Price
28. Total Expenses/ Net Sales
Expense Ratio Formula
Markdown Percentage
Current Liabilities
Acid test or Quick Ratio
29. (Cash + Accounts Receivable) / Current Liabilities
Early Markdowns
FIFO (First in - First out)
Acid Test or Quick Ratio (QR) Formula
Assets
30. Net Profit After Taxes/ Total Assets
Reasons for taking Markdowns
Ideal Markdown
Markup % of Retail Formula
Return on Assets (ROA) Formul
31. One that is just enough to move the goods
Ideal Markdown
Cash Flow Formula
Turnover Rate Formula
New Price
32. The prices from lowest to highest that are carried within a merchandise category
Accounts Receivable (AR)
Pricing Strategies: Price Ranges
Assets Formula
Return on Sales
33. Priced too high initially - priced too low - selling price of competitors
Markup
Pricing Errors
Forced Obsolescence
Retail Inventory Method
34. Evaluates the managament of capital
Return on Sales
Assets Formula
Markdown Percentage Formula
Financial Leverage Ratio Formula
35. Buying errors - promotion errors - pricing errors - uncontrollable errors
Cost of Goods Sold
Markup
Reasons for taking Markdowns
Clearance Markdowns
36. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Assets
Markdown Cancellations
Adage of Profitability for Retailers
37. Total Assets/ Net Worth
Retail Price Formula
Cost of Goods Sold
Pricing Strategies: Price Ranges
Financial Leverage Ratio Formula
38. Having the right merchandise - at the right time - for the right price - in the right place
Profit and Loss Statement (P&L Statement)
Cost of Goods Sold
The Cost Method
Adage of Profitability for Retailers
39. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Markup % of Retail Formula
Profit
Profit and Loss Statement (P&L Statement)
Markdown Percentage
40. Price is changed (up or down)
Late Markdowns
New Price
Markdown Optimization
Markdown optimization
41. 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
Original Price
Pricing Depends on 2 factors
Debt Equity Ratio
Buying Errors
42. Dollar markup ($)/ retail price ($)
The Cost Method
Markup % of Retail Formula
Promotion Errors
Markup
43. 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.
Accounts Receivable (AR)
Return on Net Worth (RONW) Formula
Markdown Optimization
Acid test or Quick Ratio
44. The energizing force that fuels and sustains our economic system
Inventory
Profit
Pricing Strategies: Price Zones
Regular Price
45. Cost Price/ (100%-markup %)
Markup % of Retail Formula
Sell-Through Rate
Cost of Goods Sold (COGS) Formula
Retail Price Formula
46. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Markdown optimization
Profit
Depreciation
Off-Price Markdowns
47. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Ideal Markdown
Retail Price Formula
Markdown Cancellations
Fixed Liabilities
48. 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
Current Ratio
Early Markdowns
Clearance Markdowns
Acid Test or Quick Ratio (QR) Formula
49. What the retailer owns in monetary value
Off-Price Markdown Percentage Formula
Assets
LIFO (last in - first out)
Expense Ratio
50. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Gross Margin Return on Inventory Investment-GMROI Formula
Net Profit
Retail Inventory Method
Turnover Rate Formula
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