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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. Promotional markdown that involves selling at or near cost for promotional purposes
Late Markdowns
Markdown Cancellations
Expense Ratio Formula
Loss-Leader
2. Revenues received by a retailer
Expense Ratio
Selling Price Formula
Net Sales
Debt Equity Ratio
3. Net dollar markdown/ net dollar selling price
Return on Assets (ROA) Formul
Markdown
Depreciation
Markdown Percentage Formula
4. 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)
Assets
Fixed Assets
Depreciation
5. Priced too high initially - priced too low - selling price of competitors
Markdown optimization
Pricing Errors
Markup
Acid Test or Quick Ratio (QR) Formula
6. 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
Debt Equity Ratio Formula
Profit Margin
Planned Initial Markup % Formula
GMROII (Gross Margin Return on Inventory Investment)
7. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Retail Inventory Method
FIFO (First in - First out)
Gross Margin
Current Liabilities
8. The number of items remaining in stock x dollar markdown
Markup % of Cost Formula
Return on Assets
Fixed Assets
Markdown Cancellation ($) Formula
9. (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%
Temporary Price Reduction
Retail Inventory Method
Planned Initial Markup % Formula
Current Ratio (CR) Formula
10. The retailers financial condition at a specific point in time
Profit and Loss Statement (P&L Statement)
Balance Sheet
Inventory
Markdown Percentage Formula
11. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Markdown Percentage Formula
Markdown Cancellations
Markup
Markdown Optimization
12. 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.
Net Sales
FIFO (First in - First out)
Accounts Receivable (AR)
Fixed Assets
13. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
LIFO (last in - first out)
Markdown Optimization
Financial Leverage Ratio
Pricing Errors
14. Financial debts incurred by a retailer
Liabilities
Return on Net Worth
Current Assets
Ideal Markdown
15. Ranges of prices that appeals for a particular group of consumers
Off-Price Markdown Percentage Formula
Return on Net Worth
Pricing Strategies: Price Zones
Selling Price Formula
16. Cost + Markup
Uncontrollable Errors
Selling Price Formula
Original Price
Late Markdowns
17. One that is just enough to move the goods
Profit and Loss Statement (P&L Statement)
Profit Margin Analysis Formula
Pricing Strategies
Ideal Markdown
18. 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
Clearance Markdowns
New Price
Pricing Errors
19. Costs involved in running the business
Operating Expenses
Markdown Optimization
Gross Margin Return on Inventory Investment-GMROI Formula
Fixed Liabilities
20. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Profit Margin
Early Markdowns
Markdown optimization
Markdown Percentage
21. Improper displays - merchandise returns due to high pressure selling
Regular Price
Profit Margin Analysis Formula
Cost of Goods Sold
Promotion Errors
22. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Early Markdowns
Price Sensitivity
Return on Net Worth
Debt Equity Ratio
23. 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
FIFO (First in - First out)
Promotion Errors
Cost of Goods Sold (COGS) Formula
Markup % of Cost Formula
24. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Current Ratio
Off-Price Markdown Percentage Formula
Pricing Depends on 2 factors
GMROII (Gross Margin Return on Inventory Investment)
25. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Current Liabilities
Promotional Markdown
Uncontrollable Errors
Pricing Strategies: Price Zones
26. 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
Promotional Markdown
Dollar Markdown Formula
Forced Obsolescence
5 Steps of Retail Inventory Method
27. Cash Received by the retailer-cash leaving the retailer
Operating Expenses
Cash Flow Formula
Profit Margin Analysis Formula
Forced Obsolescence
28. Net Profit After Taxes/ Net Worth
Reasons for taking Markdowns
Markdown Cancellation ($) Formula
Return on Net Worth (RONW) Formula
Pricing Strategies: Price Zones
29. Evaluates the managament of capital
Planned Initial Markup % Formula
Profit Margin
Return on Sales
Markdown Cancellation ($) Formula
30. Liabilities+ Owner's equity or net worth
Assets Formula
LIFO (last in - first out)
Depreciation
Adage of Profitability for Retailers
31. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Return on Net Worth
Ideal Markdown
Financial Leverage Ratio
Loss-Leader
32. 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
Initial Markup (IMU)
LIFO (last in - first out)
Loss-Leader
Markdown Percentage
33. Buying errors - promotion errors - pricing errors - uncontrollable errors
Cost Complement Formula
Current Assets
Markdown
Reasons for taking Markdowns
34. 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
Current Assets
Markdown Percentage
Markdown Cancellations
Current Ratio
35. Can be transformed simply and rapidly into cash
Cumulative Markup
Current Assets
Inventory
Retail Inventory Method
36. 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.
Cost of Goods Sold (COGS) Formula
Promotional Markdown
Profit
Inventory
37. Net Profit After Taxes/ Total Assets
Fixed Liabilities
Net Sales
Inventory
Return on Assets (ROA) Formul
38. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Reasons for taking Markdowns
Assets
Early Markdowns
39. Ensures that there is enough cash to pay debts. Any time the ratio is colse to 1 - the retailer is said to be in a liquid position.
Initial Markup (IMU)
Retail Price Formula
Fixed Liabilities
Acid test or Quick Ratio
40. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Fixed Liabilities
Selling Price Formula
Debt Equity Ratio
Markdown optimization
41. 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
Return on Assets (ROA) Formul
Off-Price Markdowns
Pricing Strategies
42. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Retail Inventory Method
Pricing Strategies: Price Ranges
Forced Obsolescence
Initial Markup (IMU)
43. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Current Ratio (CR) Formula
Fixed Assets
Off-Price Markdown Percentage Formula
Return on Assets (ROA) Formul
44. Short time - like 1 or 2 day sales
Temporary Price Reduction
Return on Assets (ROA) Formul
Buying Errors
Turnover Rate Formula
45. Price Lining - price zones - price ranges
Retail Price Formula
Profit Margin Analysis Formula
Pricing Strategies
Pricing Strategies: Price Ranges
46. The prices from lowest to highest that are carried within a merchandise category
Original Price
Pricing Errors
Pricing Strategies: Price Ranges
Markup
47. 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
Assets Formula
Price Sensitivity
Clearance Markdowns
Assets
48. Cost Price/ (100%-markup %)
Markdown Cancellation ($) Formula
Retail Price Formula
Buying Errors
Markup % of Cost Formula
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
Markup
Pricing Strategies: Price Lining
Early Markdowns
Acid Test or Quick Ratio (QR) Formula
50. First price or Manufacturers suggestet Retal Price (MSRP)
Reasons for taking Markdowns
Return on Sales
Financial Leverage Ratio Formula
Original Price