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Test your basic knowledge |
Retail Financials
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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. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Profit and Loss Statement (P&L Statement)
Fixed Assets
Net Sales
Sell-Through Rate
2. Cash Received by the retailer-cash leaving the retailer
Loss-Leader
Cash Flow Formula
Markup % of Retail Formula
Planned Initial Markup % Formula
3. Current Liabilites/ Net Worth
Liabilities
Gross Margin
Debt Equity Ratio Formula
The Cost Method
4. Buying errors - promotion errors - pricing errors - uncontrollable errors
Reasons for taking Markdowns
Liabilities
Regular Price
Turnover Rate Formula
5. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Pricing Strategies
Retail Inventory Method
Return on Assets (ROA) Formul
Depreciation
6. Sales for the period/ average inventory
Turnover Rate Formula
Expense Ratio Formula
Off-Price Markdowns
LIFO (last in - first out)
7. 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.
Markdown Optimization
Liabilities
Expense Ratio Formula
Expense Ratio
8. 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
Pricing Strategies: Price Lining
The Cost Method
LIFO (last in - first out)
Profit and Loss Statement (P&L Statement)
9. Total Assets/ Net Worth
Regular Price
Financial Leverage Ratio Formula
Current Ratio
Promotional Markdown
10. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Profit
Balance Sheet
Early Markdowns
Financial Leverage Ratio
11. Total Markup on all goods on hand/ retail price of all goods on hand
Initial Markup (IMU)
Cumulative Markup % Formula
Markup
Loss-Leader
12. Price is changed (up or down)
Loss-Leader
Planned Initial Markup % Formula
New Price
Debt Equity Ratio
13. The cost of merchandise that was sold (including the method that was used to determine cost)
Cost of Goods Sold
Retail Inventory Method
Cash Flow Formula
Retail Price Formula
14. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Profit Margin Analysis Formula
Off-Price Markdowns
Balance Sheet
Return on Sales
15. Current Assets/ Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Current Ratio (CR) Formula
Promotional Markdown
Pricing Strategies: Price Lining
16. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Turnover Rate Formula
Assets Formula
Forced Obsolescence
Accounts Receivable (AR)
17. Having the right merchandise - at the right time - for the right price - in the right place
Adage of Profitability for Retailers
Current Assets
Original Price
Markdown optimization
18. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Profit and Loss Statement (P&L Statement)
Pricing Strategies: Price Lining
Markdown
Inventory
19. 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
Fixed Liabilities
Return on Net Worth
Markdown Cancellation ($) Formula
20. 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
Forced Obsolescence
Pricing Errors
Dollar Markdown Formula
GMROII (Gross Margin Return on Inventory Investment)
21. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Loss-Leader
Liabilities
Sell-Through Rate
Retail Inventory Method
22. Price Lining - price zones - price ranges
FIFO (First in - First out)
Retail Price Formula
Pricing Strategies
Cost of Goods Sold (COGS) Formula
23. Net dollar markdown/ net dollar selling price
Markdown optimization
New Price
Markup % of Cost Formula
Markdown Percentage Formula
24. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Acid Test or Quick Ratio (QR) Formula
Current Liabilities
Return on Net Worth
Markdown Cancellations
25. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Expense Ratio
Off-Price Markdowns
Forced Obsolescence
Markdown
26. Cost + Markup
Selling Price Formula
Late Markdowns
GMROII (Gross Margin Return on Inventory Investment)
Markdown Optimization
27. Net Profit After Taxes/ Total Assets
Financial Leverage Ratio Formula
Initial Markup (IMU)
Depreciation
Return on Assets (ROA) Formul
28. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Off-Price Markdown Percentage Formula
Return on Assets (ROA) Formul
Turnover Rate Formula
Buying Errors
29. Ranges of prices that appeals for a particular group of consumers
Pricing Strategies: Price Zones
Operating Expenses
Expense Ratio Formula
Cash Flow Formula
30. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
5 Steps of Retail Inventory Method
Pricing Strategies: Price Lining
Current Liabilities
Markdown Cancellations
31. The weather - merchandise is shopworn - economic downturn
Off-Price Markdowns
Uncontrollable Errors
Expense Ratio
LIFO (last in - first out)
32. Promotional markdown that involves selling at or near cost for promotional purposes
Retail Inventory Method
Promotional Markdown
Loss-Leader
Cumulative Markup
33. (Cash + Accounts Receivable) / Current Liabilities
Selling Price Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Fixed Liabilities
Acid Test or Quick Ratio (QR) Formula
34. 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.
Regular Price
Accounts Receivable (AR)
Net Sales
Cost of Goods Sold (COGS) Formula
35. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
The Cost Method
Pricing Depends on 2 factors
Cost of Goods Sold (COGS) Formula
Late Markdowns
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.
Retail Inventory Method
Selling Price Formula
Return on Net Worth (RONW) Formula
Markdown Optimization
37. Original Retail price- markdown selling price
Expense Ratio
Regular Price
Markdown Optimization
Dollar Markdown Formula
38. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Assets Formula
Fixed Liabilities
5 Steps of Retail Inventory Method
Off-Price Markdowns
39. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Cumulative Markup
Selling Price Formula
Current Assets
Markdown Percentage
40. 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.
Promotional Markdown
Initial Markup (IMU)
GMROII (Gross Margin Return on Inventory Investment)
Markdown optimization
41. 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)
Adage of Profitability for Retailers
Promotional Markdown
Profit Margin
42. The energizing force that fuels and sustains our economic system
Dollar Markdown Formula
Promotion Errors
Profit
Pricing Strategies: Price Zones
43. (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%
Off-Price Markdowns
Cost of Goods Sold (COGS) Formula
Retail Price Formula
Planned Initial Markup % Formula
44. (gross margin % x Turnover) / (100%-markup %)
Profit Margin Analysis Formula
Gross Margin Return on Inventory Investment-GMROI Formula
Pricing Depends on 2 factors
Early Markdowns
45. Usually lower than original - but held for longer period
Selling Price Formula
Gross Margin
Clearance Markdowns
Regular Price
46. 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
Gross Margin
The Cost Method
Current Ratio
47. 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
5 Steps of Retail Inventory Method
Early Markdowns
Balance Sheet
Cost Complement Formula
48. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Cost of Goods Sold (COGS) Formula
Acid Test or Quick Ratio (QR) Formula
Profit
49. Net Profit/ Net Sales
GMROII (Gross Margin Return on Inventory Investment)
Turnover Rate Formula
Return on Sales
Profit Margin Analysis Formula
50. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Early Markdowns
Markdown Optimization
Accounts Receivable (AR)