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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. One that is just enough to move the goods
Loss-Leader
Ideal Markdown
Retail Price Formula
Late Markdowns
2. 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
Temporary Price Reduction
Markdown Percentage Formula
Debt Equity Ratio
Acid test or Quick Ratio
3. The weather - merchandise is shopworn - economic downturn
Turnover Rate Formula
Financial Leverage Ratio
Markup
Uncontrollable Errors
4. 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.
Gross Margin
Markup
The Cost Method
Promotion Errors
5. Improper displays - merchandise returns due to high pressure selling
Buying Errors
Markdown
Clearance Markdowns
Promotion Errors
6. 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
Cost Complement Formula
Clearance Markdowns
Pricing Strategies: Price Lining
Retail Inventory Method
7. The energizing force that fuels and sustains our economic system
Fixed Assets
LIFO (last in - first out)
Ideal Markdown
Profit
8. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
Fixed Liabilities
Pricing Errors
Pricing Strategies: Price Zones
9. Total Assets/ Net Worth
Financial Leverage Ratio Formula
FIFO (First in - First out)
Return on Assets
Current Ratio (CR) Formula
10. 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
FIFO (First in - First out)
Fixed Liabilities
The Cost Method
Return on Assets
11. 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
Financial Leverage Ratio
Off-Price Markdown Percentage Formula
Financial Leverage Ratio Formula
12. Price is changed (up or down)
5 Steps of Retail Inventory Method
Regular Price
Buying Errors
New Price
13. (Cash + Accounts Receivable) / Current Liabilities
Markdown Optimization
Initial Markup (IMU)
Acid Test or Quick Ratio (QR) Formula
Late Markdowns
14. Total Markup on all goods on hand/ retail price of all goods on hand
Pricing Strategies: Price Zones
Return on Assets
Cumulative Markup % Formula
Retail Price Formula
15. What the retailer owns in monetary value
Assets
Markdown Optimization
Initial Markup (IMU)
Acid Test or Quick Ratio (QR) Formula
16. Cost + Markup
Pricing Depends on 2 factors
Financial Leverage Ratio Formula
Selling Price Formula
Profit Margin Analysis Formula
17. Financial debts incurred by a retailer
Liabilities
Operating Expenses
Markdown
Acid Test or Quick Ratio (QR) Formula
18. Priced too high initially - priced too low - selling price of competitors
Accounts Receivable (AR)
Buying Errors
Pricing Errors
Regular Price
19. Costs involved in running the business
Pricing Strategies: Price Zones
Original Price
Operating Expenses
Adage of Profitability for Retailers
20. Promotional markdown that involves selling at or near cost for promotional purposes
Temporary Price Reduction
Markup
Loss-Leader
Assets
21. The number of items remaining in stock x dollar markdown
Current Ratio
Return on Assets
Expense Ratio Formula
Markdown Cancellation ($) Formula
22. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Off-Price Markdowns
Return on Assets (ROA) Formul
Current Ratio (CR) Formula
23. Price Lining - price zones - price ranges
Pricing Depends on 2 factors
Net Profit
Profit Margin Analysis Formula
Pricing Strategies
24. Liabilities+ Owner's equity or net worth
Clearance Markdowns
Assets Formula
The Cost Method
Gross Margin
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
Markdown optimization
Expense Ratio Formula
Fixed Liabilities
Debt Equity Ratio
26. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Pricing Strategies: Price Zones
Cost of Goods Sold (COGS) Formula
Liabilities
Cumulative Markup % Formula
27. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Off-Price Markdowns
Inventory
Current Liabilities
Pricing Strategies: Price Lining
28. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Cost of Goods Sold
Net Profit
Gross Margin Return on Inventory Investment-GMROI Formula
Markdown Cancellations
29. 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
Net Profit
Cash Flow Formula
Current Ratio
Original Price
30. The cost of merchandise that was sold (including the method that was used to determine cost)
Pricing Errors
Cumulative Markup % Formula
Markdown Cancellations
Cost of Goods Sold
31. Current Liabilites/ Net Worth
Return on Net Worth
Price Sensitivity
Debt Equity Ratio Formula
5 Steps of Retail Inventory Method
32. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Profit Margin
Dollar Markdown Formula
Ideal Markdown
33. 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.
Inventory
Liabilities
FIFO (First in - First out)
Reasons for taking Markdowns
34. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Net Profit
Gross Margin Return on Inventory Investment-GMROI Formula
Acid test or Quick Ratio
35. 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
Assets
Early Markdowns
Return on Assets (ROA) Formul
Financial Leverage Ratio
36. 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.
LIFO (last in - first out)
Liabilities
Expense Ratio Formula
Promotional Markdown
37. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Fixed Liabilities
Profit and Loss Statement (P&L Statement)
LIFO (last in - first out)
Markdown Cancellations
38. Net Profit After Taxes/ Net Worth
Selling Price Formula
Retail Inventory Method
Price Sensitivity
Return on Net Worth (RONW) Formula
39. 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
5 Steps of Retail Inventory Method
Cumulative Markup % Formula
Cash Flow Formula
Price Sensitivity
40. (gross margin % x Turnover) / (100%-markup %)
LIFO (last in - first out)
Gross Margin Return on Inventory Investment-GMROI Formula
Late Markdowns
Current Ratio
41. 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
Debt Equity Ratio
5 Steps of Retail Inventory Method
Cumulative Markup
Expense Ratio Formula
42. Can be transformed simply and rapidly into cash
Off-Price Markdown Percentage Formula
Markup
The Cost Method
Current Assets
43. 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
Regular Price
Price Sensitivity
GMROII (Gross Margin Return on Inventory Investment)
Cost Complement Formula
44. Net Profit After Taxes/ Total Assets
Current Ratio (CR) Formula
Expense Ratio
Markup
Return on Assets (ROA) Formul
45. Evaluates the managament of capital
Cost Complement Formula
Pricing Strategies: Price Lining
Cumulative Markup % Formula
Return on Sales
46. Net dollar markdown/ net dollar selling price
Markdown Percentage Formula
Depreciation
Markdown
Acid test or Quick Ratio
47. Dollar markup ($)/ cost price ($)
Markup % of Cost Formula
Promotion Errors
Regular Price
Return on Assets (ROA) Formul
48. The prices from lowest to highest that are carried within a merchandise category
Dollar Markdown Formula
Return on Net Worth
Pricing Strategies: Price Ranges
Cost Complement Formula
49. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Clearance Markdowns
Retail Inventory Method
Forced Obsolescence
Off-Price Markdowns
50. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Selling Price Formula
Markdown Percentage
Uncontrollable Errors
Retail Inventory Method