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Retail Financials
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. 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
Assets
Late Markdowns
Pricing Strategies: Price Ranges
Sell-Through Rate
2. Net Profit After Taxes/ Total Assets
Markdown optimization
Return on Assets (ROA) Formul
Fixed Liabilities
Pricing Strategies
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
Pricing Strategies: Price Zones
Profit Margin
Pricing Depends on 2 factors
Financial Leverage Ratio
4. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Markdown Optimization
Accounts Receivable (AR)
Profit and Loss Statement (P&L Statement)
Return on Net Worth (RONW) Formula
5. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Loss-Leader
FIFO (First in - First out)
Current Liabilities
Markdown optimization
6. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Current Ratio
Pricing Depends on 2 factors
Regular Price
Initial Markup (IMU)
7. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Inventory
Markdown Percentage Formula
Sell-Through Rate
Markdown Cancellations
8. Priced too high initially - priced too low - selling price of competitors
Cost of Goods Sold
Pricing Errors
Retail Inventory Method
Markdown Percentage
9. Revenues received by a retailer
Cash Flow Formula
5 Steps of Retail Inventory Method
Net Sales
Acid Test or Quick Ratio (QR) Formula
10. One that is just enough to move the goods
Ideal Markdown
The Cost Method
Markdown Optimization
Temporary Price Reduction
11. Original Retail price- markdown selling price
Liabilities
Profit
Dollar Markdown Formula
Depreciation
12. Cost Price/ (100%-markup %)
Markdown Cancellations
Markdown optimization
Markdown Percentage Formula
Retail Price Formula
13. The retailers financial condition at a specific point in time
Current Assets
Balance Sheet
Dollar Markdown Formula
Reasons for taking Markdowns
14. Financial debts incurred by a retailer
Debt Equity Ratio Formula
Forced Obsolescence
Retail Price Formula
Liabilities
15. 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
Debt Equity Ratio Formula
New Price
LIFO (last in - first out)
Original Price
16. Improper displays - merchandise returns due to high pressure selling
Pricing Strategies: Price Ranges
Promotion Errors
Fixed Assets
Current Ratio (CR) Formula
17. 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
Expense Ratio Formula
Assets Formula
Current Ratio
Return on Net Worth (RONW) Formula
18. Ranges of prices that appeals for a particular group of consumers
Cost of Goods Sold (COGS) Formula
Pricing Strategies: Price Zones
Expense Ratio Formula
Return on Assets
19. 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.
Accounts Receivable (AR)
Markdown optimization
Markdown Percentage
Fixed Assets
20. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Off-Price Markdowns
Early Markdowns
Markup
21. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Financial Leverage Ratio Formula
Temporary Price Reduction
Current Liabilities
Off-Price Markdown Percentage Formula
22. Total Markup on all goods on hand/ retail price of all goods on hand
Markdown
Debt Equity Ratio Formula
Price Sensitivity
Cumulative Markup % Formula
23. Buying errors - promotion errors - pricing errors - uncontrollable errors
Pricing Strategies
Reasons for taking Markdowns
Buying Errors
Gross Margin Return on Inventory Investment-GMROI Formula
24. 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.
Cost Complement Formula
Acid test or Quick Ratio
Markup
Promotion Errors
25. Promotional markdown that involves selling at or near cost for promotional purposes
Loss-Leader
Profit Margin
Reasons for taking Markdowns
New Price
26. What the retailer owns in monetary value
Assets
Planned Initial Markup % Formula
Fixed Liabilities
Profit
27. Evaluates the managament of capital
Regular Price
Return on Sales
Current Ratio (CR) Formula
Net Profit
28. 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.
Sell-Through Rate
Expense Ratio
Late Markdowns
Off-Price Markdowns
29. Current Assets/ Current Liabilities
FIFO (First in - First out)
Current Ratio (CR) Formula
Sell-Through Rate
Profit and Loss Statement (P&L Statement)
30. 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.
Cost of Goods Sold (COGS) Formula
Acid test or Quick Ratio
Promotional Markdown
Ideal Markdown
31. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented.
Inventory
Cost of Goods Sold
Acid test or Quick Ratio
Markdown Optimization
32. Sales less cost of goods sold
Pricing Strategies: Price Zones
Adage of Profitability for Retailers
Off-Price Markdown Percentage Formula
Gross Margin
33. Merchandise Available for sale at cost/ Merchandise available for sale at retail
Cost Complement Formula
Uncontrollable Errors
Fixed Liabilities
Regular Price
34. 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
Profit Margin
FIFO (First in - First out)
Markdown
Liabilities
35. (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%
Pricing Errors
Assets Formula
Current Liabilities
Planned Initial Markup % Formula
36. The cost of merchandise that was sold (including the method that was used to determine cost)
Balance Sheet
Markup
Cost of Goods Sold
Cost Complement Formula
37. The number of items remaining in stock x dollar markdown
Markdown Cancellation ($) Formula
Expense Ratio
Original Price
Regular Price
38. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Return on Net Worth
Assets Formula
New Price
Promotional Markdown
39. The extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Fixed Liabilities
Operating Expenses
Financial Leverage Ratio
Cost of Goods Sold (COGS) Formula
40. Total Assets/ Net Worth
Initial Markup (IMU)
Accounts Receivable (AR)
Retail Inventory Method
Financial Leverage Ratio Formula
41. (gross margin % x Turnover) / (100%-markup %)
Net Sales
Gross Margin Return on Inventory Investment-GMROI Formula
Profit and Loss Statement (P&L Statement)
5 Steps of Retail Inventory Method
42. Price Lining - price zones - price ranges
Cumulative Markup
Cost of Goods Sold
Pricing Strategies
5 Steps of Retail Inventory Method
43. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Markdown Cancellations
Depreciation
Return on Assets
Return on Net Worth (RONW) Formula
44. The prices from lowest to highest that are carried within a merchandise category
Current Assets
Turnover Rate Formula
Acid test or Quick Ratio
Pricing Strategies: Price Ranges
45. Dollar markup ($)/ cost price ($)
Markdown Cancellations
Debt Equity Ratio
Cash Flow Formula
Markup % of Cost Formula
46. Price is changed (up or down)
Acid Test or Quick Ratio (QR) Formula
New Price
Adage of Profitability for Retailers
Promotion Errors
47. Inventory Valuation Method where the cost to the retailer of each item purchased from a vendor is entered in the accounting system and/or placed on the merchandise item or on it's package. At times - freight charges are built into the cost. Coding of
Current Liabilities
Profit
The Cost Method
Cumulative Markup % Formula
48. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Pricing Strategies: Price Lining
Cost of Goods Sold
Markdown Cancellation ($) Formula
Retail Inventory Method
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
Late Markdowns
Early Markdowns
Return on Net Worth
Gross Margin
50. Cash Received by the retailer-cash leaving the retailer
Debt Equity Ratio
Expense Ratio Formula
Uncontrollable Errors
Cash Flow Formula
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