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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. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Price Sensitivity
Markup % of Retail Formula
LIFO (last in - first out)
Off-Price Markdown Percentage Formula
2. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
5 Steps of Retail Inventory Method
Fixed Liabilities
Markdown Percentage
3. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Liabilities
Price Sensitivity
Ideal Markdown
Buying Errors
4. (gross margin % x Turnover) / (100%-markup %)
Debt Equity Ratio Formula
Markdown Percentage Formula
Off-Price Markdowns
Gross Margin Return on Inventory Investment-GMROI Formula
5. Buying errors - promotion errors - pricing errors - uncontrollable errors
Off-Price Markdowns
Late Markdowns
Reasons for taking Markdowns
Markup % of Retail Formula
6. Total Assets/ Net Worth
Debt Equity Ratio
Markdown Cancellation ($) Formula
Planned Initial Markup % Formula
Financial Leverage Ratio Formula
7. Net Profit After Taxes/ Total Assets
Net Profit
Balance Sheet
Return on Assets (ROA) Formul
Selling Price Formula
8. Priced too high initially - priced too low - selling price of competitors
Gross Margin Return on Inventory Investment-GMROI Formula
Liabilities
GMROII (Gross Margin Return on Inventory Investment)
Pricing Errors
9. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Cost Complement Formula
Fixed Assets
Return on Net Worth
Uncontrollable Errors
10. Cost Price/ (100%-markup %)
Retail Price Formula
Net Profit
Cost Complement Formula
Markdown Cancellation ($) Formula
11. First price or Manufacturers suggestet Retal Price (MSRP)
Loss-Leader
Original Price
Initial Markup (IMU)
Depreciation
12. 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
Pricing Depends on 2 factors
Markdown Percentage
Profit and Loss Statement (P&L Statement)
13. Evaluates the managament of capital
Return on Sales
Net Profit
Off-Price Markdown Percentage Formula
Cumulative Markup % Formula
14. AKA Return on Sales - Profit analysis; Indicates the extend to which retailers have the ability to cover their expenses and earn a profit - as well as a buyers ability to purchase the correct assortment of merchandise
Return on Sales
Profit Margin
Acid test or Quick Ratio
Markdown
15. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Return on Assets
Current Assets
Promotion Errors
Current Liabilities
16. Short time - like 1 or 2 day sales
Profit and Loss Statement (P&L Statement)
Sell-Through Rate
Cost of Goods Sold (COGS) Formula
Temporary Price Reduction
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
Operating Expenses
Original Price
Cash Flow Formula
18. The retailers financial condition at a specific point in time
Balance Sheet
Current Liabilities
Fixed Assets
Current Ratio
19. 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
Debt Equity Ratio Formula
Net Profit
Debt Equity Ratio
Reasons for taking Markdowns
20. The weather - merchandise is shopworn - economic downturn
Cost Complement Formula
Expense Ratio
Off-Price Markdowns
Uncontrollable Errors
21. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Gross Margin Return on Inventory Investment-GMROI Formula
Markdown Percentage
Markdown Cancellations
Selling Price Formula
22. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Operating Expenses
The Cost Method
Markdown
Liabilities
23. What the retailer owns in monetary value
Net Sales
Assets
Debt Equity Ratio
Price Sensitivity
24. Revenues received by a retailer
Assets
Net Sales
FIFO (First in - First out)
Adage of Profitability for Retailers
25. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Net Profit
Markdown Percentage Formula
FIFO (First in - First out)
Current Liabilities
26. 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.
Promotion Errors
Acid test or Quick Ratio
Expense Ratio
LIFO (last in - first out)
27. Dollar markup ($)/ retail price ($)
Cost Complement Formula
Markdown Optimization
Expense Ratio
Markup % of Retail Formula
28. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Loss-Leader
Debt Equity Ratio
Net Profit
Depreciation
29. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Assets Formula
Markdown Optimization
Buying Errors
Profit Margin Analysis Formula
30. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Markup
Pricing Depends on 2 factors
Fixed Liabilities
Profit and Loss Statement (P&L Statement)
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
Fixed Liabilities
Debt Equity Ratio Formula
Accounts Receivable (AR)
5 Steps of Retail Inventory Method
32. The largest sum of money in current assets. Can be presented in either cost or retail terms. Should be purchased for a short period of time - as products lose monetary value over time and are subject to markdowns.
Financial Leverage Ratio Formula
Inventory
Cumulative Markup % Formula
Off-Price Markdown Percentage Formula
33. Dollar markup ($)/ cost price ($)
Retail Price Formula
Markup % of Cost Formula
Cost of Goods Sold
Temporary Price Reduction
34. The energizing force that fuels and sustains our economic system
The Cost Method
Profit
Debt Equity Ratio
Debt Equity Ratio Formula
35. Price Lining - price zones - price ranges
New Price
Return on Assets (ROA) Formul
Pricing Strategies
Assets Formula
36. Sales less cost of goods sold
Expense Ratio
Markdown
Selling Price Formula
Gross Margin
37. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Net Profit
Profit and Loss Statement (P&L Statement)
Net Sales
Buying Errors
38. Original Retail price- markdown selling price
Markup % of Retail Formula
Off-Price Markdowns
Dollar Markdown Formula
Pricing Strategies: Price Lining
39. 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.
Pricing Strategies: Price Ranges
Current Assets
Turnover Rate Formula
Accounts Receivable (AR)
40. (Cash + Accounts Receivable) / Current Liabilities
Cost Complement Formula
LIFO (last in - first out)
Dollar Markdown Formula
Acid Test or Quick Ratio (QR) Formula
41. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Pricing Strategies: Price Zones
Buying Errors
Off-Price Markdowns
42. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Fixed Assets
Early Markdowns
Markdown Percentage
Gross Margin Return on Inventory Investment-GMROI Formula
43. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Clearance Markdowns
Initial Markup (IMU)
Liabilities
Temporary Price Reduction
44. 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
Return on Sales
Assets
Retail Price Formula
45. 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
Regular Price
Pricing Strategies: Price Ranges
Price Sensitivity
Selling Price Formula
46. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Uncontrollable Errors
Retail Price Formula
Cost of Goods Sold (COGS) Formula
Adage of Profitability for Retailers
47. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Markup % of Retail Formula
Forced Obsolescence
Markdown Percentage
48. Net Profit/ Net Sales
Regular Price
Profit Margin
Buying Errors
Profit Margin Analysis Formula
49. 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
Gross Margin
Selling Price Formula
Return on Net Worth (RONW) Formula
The Cost Method
50. Can be transformed simply and rapidly into cash
5 Steps of Retail Inventory Method
Current Assets
Current Liabilities
Gross Margin Return on Inventory Investment-GMROI Formula