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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. (Cash + Accounts Receivable) / Current Liabilities
Pricing Strategies
Return on Net Worth
Cumulative Markup
Acid Test or Quick Ratio (QR) Formula
2. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Profit Margin
Financial Leverage Ratio Formula
Retail Inventory Method
Operating Expenses
3. Current Liabilites/ Net Worth
Return on Net Worth
Debt Equity Ratio Formula
LIFO (last in - first out)
Current Assets
4. What the retailer owns in monetary value
Retail Price Formula
Sell-Through Rate
Assets
Acid Test or Quick Ratio (QR) Formula
5. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Return on Sales
Off-Price Markdowns
Promotion Errors
Net Profit
6. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Late Markdowns
Off-Price Markdowns
Pricing Errors
Current Liabilities
7. Sales less cost of goods sold
Gross Margin
Expense Ratio Formula
Pricing Strategies: Price Lining
Uncontrollable Errors
8. Total Assets/ Net Worth
Promotional Markdown
Markdown Percentage
Financial Leverage Ratio Formula
Cumulative Markup
9. 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
Profit
GMROII (Gross Margin Return on Inventory Investment)
Return on Assets
Fixed Assets
10. Evaluates the managament of capital
Late Markdowns
Pricing Depends on 2 factors
Return on Assets
Return on Sales
11. 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.
Expense Ratio
Markdown Cancellations
Uncontrollable Errors
Markdown
12. The retailers financial condition at a specific point in time
Balance Sheet
Profit
Current Assets
Debt Equity Ratio
13. 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.
Planned Initial Markup % Formula
Markup
Retail Price Formula
Markup % of Cost Formula
14. Dollar markup ($)/ retail price ($)
Early Markdowns
Markup % of Retail Formula
Pricing Strategies: Price Zones
Dollar Markdown Formula
15. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Profit Margin Analysis Formula
Debt Equity Ratio
Net Sales
Return on Assets
16. Net dollar markdown/ net dollar selling price
Adage of Profitability for Retailers
5 Steps of Retail Inventory Method
Markdown Percentage Formula
Buying Errors
17. Priced too high initially - priced too low - selling price of competitors
Pricing Errors
Gross Margin Return on Inventory Investment-GMROI Formula
Selling Price Formula
Depreciation
18. 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
Cash Flow Formula
Expense Ratio
Markdown optimization
19. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Gross Margin
Clearance Markdowns
LIFO (last in - first out)
Financial Leverage Ratio
20. Having the right merchandise - at the right time - for the right price - in the right place
Cumulative Markup % Formula
Ideal Markdown
Adage of Profitability for Retailers
New Price
21. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Debt Equity Ratio Formula
5 Steps of Retail Inventory Method
Ideal Markdown
Pricing Depends on 2 factors
22. 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
Clearance Markdowns
Markdown Percentage
LIFO (last in - first out)
Current Liabilities
23. Improper displays - merchandise returns due to high pressure selling
Late Markdowns
Promotion Errors
Current Liabilities
Liabilities
24. 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
Fixed Assets
Operating Expenses
Sell-Through Rate
Selling Price Formula
25. The weather - merchandise is shopworn - economic downturn
Initial Markup (IMU)
Markdown Cancellations
Uncontrollable Errors
Acid Test or Quick Ratio (QR) Formula
26. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Cost Complement Formula
Profit and Loss Statement (P&L Statement)
Markup % of Cost Formula
Off-Price Markdowns
27. Financial debts incurred by a retailer
Liabilities
Clearance Markdowns
Acid test or Quick Ratio
Net Profit
28. Total Expenses/ Net Sales
Profit
Profit Margin
Expense Ratio Formula
Markup % of Cost Formula
29. 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.
Sell-Through Rate
Reasons for taking Markdowns
Promotional Markdown
Cost Complement Formula
30. Short time - like 1 or 2 day sales
Temporary Price Reduction
Loss-Leader
Operating Expenses
Planned Initial Markup % Formula
31. Net Profit/ Net Sales
Reasons for taking Markdowns
Profit Margin Analysis Formula
Assets Formula
Selling Price Formula
32. Price Lining - price zones - price ranges
Cumulative Markup
Pricing Strategies
Pricing Strategies: Price Zones
Markup % of Retail Formula
33. Cash Received by the retailer-cash leaving the retailer
Markdown optimization
Cash Flow Formula
Markdown Percentage Formula
Markdown
34. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Price Sensitivity
Selling Price Formula
FIFO (First in - First out)
Current Liabilities
35. Current Assets/ Current Liabilities
Selling Price Formula
FIFO (First in - First out)
Current Ratio (CR) Formula
Current Assets
36. Buying errors - promotion errors - pricing errors - uncontrollable errors
Off-Price Markdowns
Return on Net Worth (RONW) Formula
Reasons for taking Markdowns
Assets Formula
37. 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
Assets Formula
Markdown Optimization
Temporary Price Reduction
FIFO (First in - First out)
38. 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
Profit Margin
5 Steps of Retail Inventory Method
Fixed Assets
Pricing Strategies: Price Zones
39. First price or Manufacturers suggestet Retal Price (MSRP)
Markup % of Cost Formula
Original Price
Late Markdowns
Depreciation
40. Costs involved in running the business
Original Price
Gross Margin
Initial Markup (IMU)
Operating Expenses
41. 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 Ratio
Uncontrollable Errors
Return on Assets
Return on Assets (ROA) Formul
42. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Current Assets
Markdown Percentage
Initial Markup (IMU)
Profit Margin Analysis Formula
43. Net Profit After Taxes/ Total Assets
Return on Assets (ROA) Formul
Promotion Errors
Markup
LIFO (last in - first out)
44. Cost Price/ (100%-markup %)
Retail Price Formula
Debt Equity Ratio Formula
Gross Margin
Balance Sheet
45. One that is just enough to move the goods
FIFO (First in - First out)
Gross Margin Return on Inventory Investment-GMROI Formula
Profit and Loss Statement (P&L Statement)
Ideal Markdown
46. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Financial Leverage Ratio Formula
Retail Price Formula
Forced Obsolescence
FIFO (First in - First out)
47. 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
Liabilities
Uncontrollable Errors
Price Sensitivity
Return on Net Worth (RONW) Formula
48. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Assets Formula
Return on Net Worth
Markup % of Cost Formula
Markdown Optimization
49. Net Profit After Taxes/ Net Worth
Return on Net Worth (RONW) Formula
Return on Sales
Pricing Errors
Forced Obsolescence
50. Total Markup on all goods on hand/ retail price of all goods on hand
Cumulative Markup % Formula
Profit Margin Analysis Formula
Fixed Assets
Acid test or Quick Ratio