Test your basic knowledge |

Retail Financials

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. Cost + Markup






2. Total Expenses/ Net Sales






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






4. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise






5. 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






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






7. 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.






8. 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.






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






10. 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






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






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






13. Net dollar markdown/ net dollar selling price






14. Price is changed (up or down)






15. The cost of merchandise that was sold (including the method that was used to determine cost)






16. 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






17. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory






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






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






20. 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






21. Net Profit After Taxes/ Total Assets






22. 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






23. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.






24. Original Retail price- markdown selling price






25. 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.






26. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)






27. Can be transformed simply and rapidly into cash






28. Net Profit After Taxes/ Net Worth






29. 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






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






31. 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






32. Buying errors - promotion errors - pricing errors - uncontrollable errors






33. The retailers financial condition at a specific point in time






34. (Cash + Accounts Receivable) / Current Liabilities






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






36. Wrong Merchandise - odd assortment colors/sizes - seasonal goods






37. 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






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






39. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)






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






41. 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






42. Sales less cost of goods sold






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






44. Revenues received by a retailer






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.






46. Merchandise Available for sale at cost/ Merchandise available for sale at retail






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






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






49. What the retailer owns in monetary value






50. The weather - merchandise is shopworn - economic downturn