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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. Sales for the period/ average inventory
Cash Flow Formula
Turnover Rate Formula
Return on Sales
Forced Obsolescence
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
Markdown optimization
Pricing Errors
Selling Price Formula
Debt Equity Ratio Formula
3. Financial debts incurred by a retailer
Cumulative Markup % Formula
Uncontrollable Errors
Regular Price
Liabilities
4. (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
Cost Complement Formula
Uncontrollable Errors
Profit and Loss Statement (P&L Statement)
5. Priced too high initially - priced too low - selling price of competitors
Retail Inventory Method
Inventory
Pricing Errors
LIFO (last in - first out)
6. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
GMROII (Gross Margin Return on Inventory Investment)
5 Steps of Retail Inventory Method
Uncontrollable Errors
7. 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
Current Assets
FIFO (First in - First out)
Reasons for taking Markdowns
Forced Obsolescence
8. Cost + Markup
Clearance Markdowns
Selling Price Formula
Pricing Strategies: Price Ranges
Pricing Errors
9. Cash Received by the retailer-cash leaving the retailer
Pricing Strategies: Price Zones
Current Liabilities
Markdown Percentage Formula
Cash Flow Formula
10. Costs involved in running the business
Financial Leverage Ratio Formula
Markdown Percentage
Price Sensitivity
Operating Expenses
11. Total Expenses/ Net Sales
Current Ratio (CR) Formula
Pricing Strategies
Cost Complement Formula
Expense Ratio Formula
12. 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.
Price Sensitivity
Assets Formula
Fixed Assets
Inventory
13. 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)
Profit and Loss Statement (P&L Statement)
Temporary Price Reduction
Expense Ratio
14. 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
Expense Ratio
Markdown Percentage
Ideal Markdown
15. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Assets
Return on Net Worth
Markdown Cancellations
LIFO (last in - first out)
16. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Off-Price Markdown Percentage Formula
Reasons for taking Markdowns
Debt Equity Ratio Formula
Markdown Optimization
17. Original Retail price- markdown selling price
Dollar Markdown Formula
Net Sales
Balance Sheet
Retail Price Formula
18. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Off-Price Markdowns
Buying Errors
Initial Markup (IMU)
Financial Leverage Ratio Formula
19. First price or Manufacturers suggestet Retal Price (MSRP)
5 Steps of Retail Inventory Method
Original Price
Pricing Strategies: Price Zones
Selling Price Formula
20. 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.
Turnover Rate Formula
Current Liabilities
Promotional Markdown
Expense Ratio
21. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Sell-Through Rate
Gross Margin
Retail Inventory Method
Current Ratio (CR) Formula
22. 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
Profit Margin
Financial Leverage Ratio Formula
Cumulative Markup % Formula
Gross Margin
23. Having the right merchandise - at the right time - for the right price - in the right place
Return on Assets (ROA) Formul
Original Price
Expense Ratio Formula
Adage of Profitability for Retailers
24. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Pricing Depends on 2 factors
Off-Price Markdowns
Gross Margin
Pricing Errors
25. Liabilities+ Owner's equity or net worth
Assets Formula
Off-Price Markdown Percentage Formula
Acid Test or Quick Ratio (QR) Formula
Clearance Markdowns
26. Net Profit/ Net Sales
Forced Obsolescence
Profit Margin Analysis Formula
The Cost Method
Pricing Errors
27. The retailers financial condition at a specific point in time
Balance Sheet
Current Liabilities
Profit
Markdown
28. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Debt Equity Ratio Formula
Return on Net Worth
Markdown Cancellations
Gross Margin
29. Dollar markup ($)/ retail price ($)
Retail Inventory Method
Pricing Strategies: Price Lining
Markup % of Retail Formula
Reasons for taking Markdowns
30. Short time - like 1 or 2 day sales
Off-Price Markdown Percentage Formula
Temporary Price Reduction
Current Assets
Expense Ratio
31. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Liabilities
Liabilities
Off-Price Markdowns
Cost Complement Formula
32. Improper displays - merchandise returns due to high pressure selling
Cost of Goods Sold
Retail Price Formula
Markdown Percentage
Promotion Errors
33. The weather - merchandise is shopworn - economic downturn
Forced Obsolescence
Markdown Cancellation ($) Formula
Assets
Uncontrollable Errors
34. Dollar markup ($)/ cost price ($)
Pricing Strategies: Price Ranges
Original Price
Markup % of Cost Formula
Temporary Price Reduction
35. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Promotion Errors
Forced Obsolescence
Late Markdowns
LIFO (last in - first out)
36. 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
Forced Obsolescence
Price Sensitivity
Dollar Markdown Formula
Net Profit
37. 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
Debt Equity Ratio
Clearance Markdowns
Return on Assets
Profit and Loss Statement (P&L Statement)
38. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Markup
Return on Net Worth
Depreciation
39. One that is just enough to move the goods
Ideal Markdown
Assets
Loss-Leader
Inventory
40. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Markdown optimization
Financial Leverage Ratio Formula
Promotion Errors
Fixed Assets
41. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Retail Price Formula
Cost of Goods Sold (COGS) Formula
Net Profit
Acid Test or Quick Ratio (QR) Formula
42. 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)
Balance Sheet
Return on Sales
Cumulative Markup
43. Evaluates the managament of capital
Pricing Errors
Net Sales
Current Assets
Return on Sales
44. 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
Accounts Receivable (AR)
Debt Equity Ratio
Turnover Rate Formula
45. 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
Planned Initial Markup % Formula
Price Sensitivity
Gross Margin Return on Inventory Investment-GMROI Formula
46. Price Lining - price zones - price ranges
Pricing Strategies
5 Steps of Retail Inventory Method
Return on Sales
Cost of Goods Sold (COGS) Formula
47. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Expense Ratio
Pricing Strategies
Planned Initial Markup % Formula
Return on Assets
48. Net dollar markdown/ net dollar selling price
Planned Initial Markup % Formula
The Cost Method
Financial Leverage Ratio Formula
Markdown Percentage 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
The Cost Method
Promotion Errors
Inventory
Cumulative Markup % Formula
50. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Temporary Price Reduction
Markdown
Markup
Selling Price Formula