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. 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






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






3. 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






4. Total Assets/ Net Worth






5. 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.






6. Net Profit After Taxes/ Total Assets






7. Cash Received by the retailer-cash leaving the retailer






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)






9. 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.






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






11. (Cash + Accounts Receivable) / Current Liabilities






12. 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.






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






14. 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.






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






16. Financial debts incurred by a retailer






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






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






19. Evaluates the managament of capital






20. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.






21. 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






22. 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.






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






24. What the retailer owns in monetary value






25. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.






26. Dollar markup ($)/ retail price ($)






27. Net dollar markdown/ net dollar selling price






28. Original Retail price- markdown selling price






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






30. 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






31. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)






32. Sales for the period/ average inventory






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






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






35. Current Assets/ Current Liabilities






36. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented






37. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.






38. 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






39. Buying errors - promotion errors - pricing errors - uncontrollable errors






40. 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






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






42. Total Markup on all goods on hand/ retail price of all goods on hand






43. 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






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






45. Current Liabilites/ Net Worth






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






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






48. Dollar markup ($)/ cost price ($)






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






50. 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