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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. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Fixed Assets
Pricing Strategies: Price Lining
Promotion Errors
Clearance Markdowns
2. Merchandise will sell at highest price longer period of time - appear exclusive - sale of goods at regular price is not disrupted - greater amount of goods can be accumulated and then marked down.
Profit
Late Markdowns
Pricing Strategies: Price Ranges
Fixed Assets
3. 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
Depreciation
5 Steps of Retail Inventory Method
Early Markdowns
Off-Price Markdowns
4. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Balance Sheet
Retail Inventory Method
Original Price
5. Sales less cost of goods sold
Current Assets
Gross Margin
FIFO (First in - First out)
Cumulative Markup
6. 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
Return on Assets
Uncontrollable Errors
Fixed Liabilities
7. 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
5 Steps of Retail Inventory Method
Clearance Markdowns
Return on Assets
Sell-Through Rate
8. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Off-Price Markdowns
Return on Assets
5 Steps of Retail Inventory Method
Financial Leverage Ratio
9. Cost Price/ (100%-markup %)
Retail Price Formula
Pricing Errors
Accounts Receivable (AR)
Pricing Strategies: Price Zones
10. The energizing force that fuels and sustains our economic system
Markup
Cost Complement Formula
Markdown Percentage
Profit
11. Financial debts incurred by a retailer
Pricing Depends on 2 factors
Assets Formula
Liabilities
Regular Price
12. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
The Cost Method
Return on Net Worth
Markdown optimization
Off-Price Markdowns
13. (gross margin % x Turnover) / (100%-markup %)
LIFO (last in - first out)
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Errors
Net Sales
14. The number of items remaining in stock x dollar markdown
Markdown Percentage Formula
Current Liabilities
Return on Net Worth (RONW) Formula
Markdown Cancellation ($) Formula
15. Having the right merchandise - at the right time - for the right price - in the right place
Financial Leverage Ratio Formula
Expense Ratio
New Price
Adage of Profitability for Retailers
16. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Markdown
Return on Net Worth (RONW) Formula
Return on Sales
Sell-Through Rate
17. (planned expenses + planned operating profit + planned stock shortages + markdowns + employee and customer discounts) / (planned net sales + stock shortages + markdowns + employee and customer discounts) x 100%
Planned Initial Markup % Formula
Return on Assets (ROA) Formul
Depreciation
Return on Assets
18. 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)
Pricing Strategies: Price Ranges
Operating Expenses
Accounts Receivable (AR)
19. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Assets Formula
Markdown Cancellations
Markup % of Retail Formula
Acid test or Quick Ratio
20. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Inventory
Markdown Optimization
Net Profit
Initial Markup (IMU)
21. Buying errors - promotion errors - pricing errors - uncontrollable errors
Cumulative Markup % Formula
Reasons for taking Markdowns
Pricing Depends on 2 factors
GMROII (Gross Margin Return on Inventory Investment)
22. Usually lower than original - but held for longer period
Current Assets
Assets Formula
Clearance Markdowns
Regular Price
23. Original Retail price- markdown selling price
Balance Sheet
Late Markdowns
Pricing Strategies
Dollar Markdown Formula
24. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Planned Initial Markup % Formula
Buying Errors
Markdown Cancellation ($) Formula
Financial Leverage Ratio Formula
25. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Financial Leverage Ratio
Promotional Markdown
Markdown Cancellation ($) Formula
Cost of Goods Sold (COGS) Formula
26. Ranges of prices that appeals for a particular group of consumers
Adage of Profitability for Retailers
Current Liabilities
Clearance Markdowns
Pricing Strategies: Price Zones
27. Promotional markdown that involves selling at or near cost for promotional purposes
Initial Markup (IMU)
Loss-Leader
Markdown optimization
Balance Sheet
28. 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
Clearance Markdowns
GMROII (Gross Margin Return on Inventory Investment)
Pricing Strategies
Retail Price Formula
29. 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
Cost of Goods Sold (COGS) Formula
Liabilities
Temporary Price Reduction
30. Price is changed (up or down)
New Price
Clearance Markdowns
Fixed Liabilities
Loss-Leader
31. Evaluates the managament of capital
GMROII (Gross Margin Return on Inventory Investment)
Pricing Strategies
Pricing Strategies: Price Zones
Return on Sales
32. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Cumulative Markup
LIFO (last in - first out)
Clearance Markdowns
Off-Price Markdowns
33. Cost + Markup
Financial Leverage Ratio
Selling Price Formula
Current Assets
Acid test or Quick Ratio
34. 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
Planned Initial Markup % Formula
Expense Ratio Formula
LIFO (last in - first out)
Buying Errors
35. 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.
Expense Ratio
Promotional Markdown
Acid test or Quick Ratio
FIFO (First in - First out)
36. The retailers financial condition at a specific point in time
Pricing Depends on 2 factors
Balance Sheet
Return on Assets
Cost of Goods Sold
37. Liabilities+ Owner's equity or net worth
Return on Assets (ROA) Formul
Turnover Rate Formula
Dollar Markdown Formula
Assets Formula
38. 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
Pricing Strategies: Price Lining
Price Sensitivity
Clearance Markdowns
Markup
39. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Assets
Cumulative Markup
Pricing Strategies
Liabilities
40. Costs involved in running the business
Operating Expenses
Markup % of Cost Formula
Assets
Dollar Markdown Formula
41. Net Profit After Taxes/ Net Worth
Liabilities
Return on Net Worth (RONW) Formula
Selling Price Formula
Cumulative Markup
42. 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
Pricing Strategies: Price Lining
Inventory
The Cost Method
Promotion Errors
43. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Markup % of Retail Formula
Fixed Liabilities
Forced Obsolescence
Pricing Errors
44. 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
Price Sensitivity
Current Ratio
Promotion Errors
Fixed Liabilities
45. Cash Received by the retailer-cash leaving the retailer
Cash Flow Formula
The Cost Method
Assets
Markup % of Cost Formula
46. Total Markup on all goods on hand/ retail price of all goods on hand
Markdown
Cumulative Markup % Formula
5 Steps of Retail Inventory Method
Clearance Markdowns
47. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
The Cost Method
Temporary Price Reduction
Selling Price Formula
48. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Assets
Fixed Liabilities
Cash Flow Formula
49. Total Expenses/ Net Sales
Expense Ratio Formula
Inventory
Promotional Markdown
Pricing Depends on 2 factors
50. 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.
Markup
Return on Sales
Acid Test or Quick Ratio (QR) Formula
Dollar Markdown Formula