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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. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Balance Sheet
Loss-Leader
Markdown Percentage
Assets Formula
2. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Cost of Goods Sold
Markdown optimization
Return on Net Worth
Operating Expenses
3. Costs involved in running the business
Pricing Strategies: Price Ranges
Loss-Leader
Operating Expenses
Buying Errors
4. 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
Price Sensitivity
Cost of Goods Sold
Profit Margin Analysis Formula
FIFO (First in - First out)
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
GMROII (Gross Margin Return on Inventory Investment)
Current Liabilities
Temporary Price Reduction
Gross Margin
6. The energizing force that fuels and sustains our economic system
Profit
Debt Equity Ratio Formula
Debt Equity Ratio
Cumulative Markup % Formula
7. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
5 Steps of Retail Inventory Method
Off-Price Markdowns
Sell-Through Rate
Markdown Percentage
8. Current Assets/ Current Liabilities
Net Sales
Return on Assets (ROA) Formul
Current Ratio (CR) Formula
Temporary Price Reduction
9. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Early Markdowns
Acid Test or Quick Ratio (QR) Formula
Pricing Strategies: Price Lining
Turnover Rate Formula
10. Usually lower than original - but held for longer period
Depreciation
Financial Leverage Ratio Formula
Regular Price
Late Markdowns
11. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Fixed Liabilities
Turnover Rate Formula
Return on Assets
12. 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
Depreciation
Markdown Cancellations
Clearance Markdowns
Profit
13. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Current Ratio (CR) Formula
Markup % of Cost Formula
LIFO (last in - first out)
Financial Leverage Ratio
14. Total Markup on all goods on hand/ retail price of all goods on hand
Promotion Errors
FIFO (First in - First out)
Cumulative Markup % Formula
Selling Price Formula
15. 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
Return on Net Worth (RONW) Formula
Promotion Errors
LIFO (last in - first out)
Selling Price Formula
16. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
Current Ratio
Operating Expenses
Profit Margin Analysis Formula
17. The retailers financial condition at a specific point in time
Original Price
Balance Sheet
Net Profit
Profit Margin Analysis Formula
18. Total Expenses/ Net Sales
Return on Assets (ROA) Formul
Expense Ratio Formula
Off-Price Markdown Percentage Formula
Current Ratio
19. Sales less cost of goods sold
Gross Margin
Markup % of Cost Formula
Expense Ratio
Loss-Leader
20. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Initial Markup (IMU)
LIFO (last in - first out)
Off-Price Markdown Percentage Formula
5 Steps of Retail Inventory Method
21. First price or Manufacturers suggestet Retal Price (MSRP)
Original Price
Profit
5 Steps of Retail Inventory Method
Current Liabilities
22. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Forced Obsolescence
Initial Markup (IMU)
Net Profit
Current Liabilities
23. Can be transformed simply and rapidly into cash
Expense Ratio
Current Ratio (CR) Formula
Current Assets
Net Profit
24. Sales for the period/ average inventory
Forced Obsolescence
Turnover Rate Formula
Financial Leverage Ratio Formula
Assets Formula
25. 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.
Profit Margin Analysis Formula
Promotional Markdown
Adage of Profitability for Retailers
The Cost Method
26. 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
Promotional Markdown
Late Markdowns
Price Sensitivity
Sell-Through Rate
27. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
5 Steps of Retail Inventory Method
Pricing Strategies: Price Ranges
Cost of Goods Sold (COGS) Formula
Debt Equity Ratio
28. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Cancellations
Markup
Markup % of Cost Formula
Cash Flow Formula
29. Improper displays - merchandise returns due to high pressure selling
Promotion Errors
Return on Assets (ROA) Formul
Current Liabilities
Profit Margin
30. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Depreciation
Cumulative Markup
Promotion Errors
Pricing Strategies
31. Price Lining - price zones - price ranges
Balance Sheet
Markup % of Retail Formula
Loss-Leader
Pricing Strategies
32. 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
Late Markdowns
Expense Ratio Formula
Profit Margin
Gross Margin Return on Inventory Investment-GMROI Formula
33. Priced too high initially - priced too low - selling price of competitors
Return on Assets (ROA) Formul
Reasons for taking Markdowns
Pricing Errors
Dollar Markdown Formula
34. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Clearance Markdowns
Buying Errors
Markdown Cancellation ($) Formula
Return on Assets
35. (Cash + Accounts Receivable) / Current Liabilities
Debt Equity Ratio
Acid Test or Quick Ratio (QR) Formula
Assets Formula
Expense Ratio
36. Evaluates the managament of capital
Loss-Leader
Debt Equity Ratio Formula
Return on Sales
The Cost Method
37. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Profit and Loss Statement (P&L Statement)
Return on Assets
Markdown
Assets
38. Ranges of prices that appeals for a particular group of consumers
Cumulative Markup
Price Sensitivity
Expense Ratio
Pricing Strategies: Price Zones
39. Having the right merchandise - at the right time - for the right price - in the right place
Clearance Markdowns
Cost of Goods Sold
Promotion Errors
Adage of Profitability for Retailers
40. 1. Determine merchandise available for sale at both cost and retail prices. 2.Calculate the cost to retail complement or percentage relationship of the cost of merchandise to the selling price. 3. Subtract markdowns taken during the period. 4. Determ
Return on Net Worth (RONW) Formula
Return on Assets
Liabilities
5 Steps of Retail Inventory Method
41. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Turnover Rate Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Fixed Liabilities
Balance Sheet
42. (gross margin % x Turnover) / (100%-markup %)
Profit and Loss Statement (P&L Statement)
Gross Margin Return on Inventory Investment-GMROI Formula
Assets
Pricing Depends on 2 factors
43. Net Profit/ Net Sales
Cash Flow Formula
Profit Margin Analysis Formula
Fixed Assets
Markdown Percentage Formula
44. Promotional markdown that involves selling at or near cost for promotional purposes
Pricing Errors
Promotion Errors
Loss-Leader
Uncontrollable Errors
45. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
Off-Price Markdown Percentage Formula
Inventory
Original Price
46. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
The Cost Method
Cumulative Markup % Formula
Acid Test or Quick Ratio (QR) Formula
Current Liabilities
47. What the retailer owns in monetary value
Initial Markup (IMU)
GMROII (Gross Margin Return on Inventory Investment)
Assets
Markdown Percentage Formula
48. One that is just enough to move the goods
Ideal Markdown
Markdown Percentage Formula
Cumulative Markup % Formula
Clearance Markdowns
49. 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 Return on Inventory Investment-GMROI Formula
Cumulative Markup % Formula
Ideal Markdown
Early Markdowns
50. 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
Markdown Percentage
Current Liabilities
Markdown optimization
Debt Equity Ratio