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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
Current Assets
Acid Test or Quick Ratio (QR) Formula
Financial Leverage Ratio Formula
2. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Off-Price Markdowns
Initial Markup (IMU)
Expense Ratio
Dollar Markdown Formula
3. Price is changed (up or down)
Assets Formula
New Price
Price Sensitivity
Fixed Liabilities
4. Financial debts incurred by a retailer
Fixed Assets
Return on Sales
Liabilities
Accounts Receivable (AR)
5. Total Assets/ Net Worth
Financial Leverage Ratio Formula
Expense Ratio
Markup % of Cost Formula
Return on Assets (ROA) Formul
6. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
LIFO (last in - first out)
Profit and Loss Statement (P&L Statement)
Ideal Markdown
Fixed Liabilities
7. Evaluates the managament of capital
Return on Sales
Cumulative Markup
Pricing Strategies: Price Zones
Return on Net Worth (RONW) Formula
8. 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
Profit Margin Analysis Formula
Net Sales
Early Markdowns
Reasons for taking Markdowns
9. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Profit Margin Analysis Formula
Off-Price Markdown Percentage Formula
Inventory
Cash Flow Formula
10. The retailers financial condition at a specific point in time
Balance Sheet
Debt Equity Ratio Formula
Uncontrollable Errors
Ideal Markdown
11. Wrong Merchandise - odd assortment colors/sizes - seasonal goods
Late Markdowns
Buying Errors
Gross Margin
Inventory
12. The cost of merchandise that was sold (including the method that was used to determine cost)
Markdown Cancellations
Cost of Goods Sold
Current Liabilities
Promotional Markdown
13. Ranges of prices that appeals for a particular group of consumers
Loss-Leader
Markup
Pricing Strategies: Price Zones
Markdown
14. Net Profit After Taxes/ Net Worth
Promotion Errors
Return on Assets
Return on Net Worth (RONW) Formula
Regular Price
15. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Forced Obsolescence
Return on Net Worth (RONW) Formula
Assets Formula
16. (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%
Markdown Optimization
Assets
Planned Initial Markup % Formula
Cumulative Markup % Formula
17. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Adage of Profitability for Retailers
Cost of Goods Sold (COGS) Formula
Current Ratio
Acid test or Quick Ratio
18. Net dollar markdown/ net dollar selling price
Pricing Strategies
Turnover Rate Formula
Financial Leverage Ratio Formula
Markdown Percentage Formula
19. Current Assets/ Current Liabilities
Cost Complement Formula
Promotional Markdown
Expense Ratio
Current Ratio (CR) Formula
20. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
Clearance Markdowns
Markdown optimization
Retail Inventory Method
Expense Ratio Formula
21. Sales for the period/ average inventory
Cumulative Markup
Depreciation
Profit Margin Analysis Formula
Turnover Rate Formula
22. The prices from lowest to highest that are carried within a merchandise category
Loss-Leader
Pricing Strategies: Price Ranges
Profit Margin Analysis Formula
Profit
23. Total Markup on all goods on hand/ retail price of all goods on hand
Operating Expenses
Cumulative Markup % Formula
Selling Price Formula
Pricing Errors
24. What the retailer owns in monetary value
Pricing Strategies: Price Ranges
Return on Net Worth
Assets
GMROII (Gross Margin Return on Inventory Investment)
25. First price or Manufacturers suggestet Retal Price (MSRP)
Markup % of Retail Formula
Original Price
GMROII (Gross Margin Return on Inventory Investment)
Promotional Markdown
26. Short time - like 1 or 2 day sales
Temporary Price Reduction
Assets Formula
Pricing Strategies: Price Ranges
Net Sales
27. Sales less cost of goods sold
Pricing Strategies
Expense Ratio Formula
Gross Margin
Markdown Percentage
28. Priced too high initially - priced too low - selling price of competitors
Original Price
Inventory
Pricing Errors
Pricing Strategies: Price Lining
29. 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
5 Steps of Retail Inventory Method
Profit Margin Analysis Formula
Off-Price Markdown Percentage Formula
30. Net Profit/ Net Sales
Off-Price Markdown Percentage Formula
Profit Margin Analysis Formula
Pricing Strategies: Price Lining
Operating Expenses
31. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Liabilities
Return on Net Worth
Pricing Errors
Markdown Cancellations
32. 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
Ideal Markdown
Cost Complement Formula
Current Ratio
Retail Inventory Method
33. 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.
Forced Obsolescence
Net Profit
Initial Markup (IMU)
Promotional Markdown
34. Usually lower than original - but held for longer period
Cost of Goods Sold (COGS) Formula
Markdown optimization
Uncontrollable Errors
Regular Price
35. 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
Assets
Markdown
5 Steps of Retail Inventory Method
36. 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
Expense Ratio
Markdown Percentage Formula
Current Assets
37. All of the capital used in operating the store - whether provided by the owners or creditors (vendors - banks)
Pricing Depends on 2 factors
Cash Flow Formula
Return on Assets
Planned Initial Markup % Formula
38. Promotional markdown that involves selling at or near cost for promotional purposes
Markdown Cancellation ($) Formula
Loss-Leader
LIFO (last in - first out)
Net Sales
39. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Cumulative Markup % Formula
Markdown Percentage
Acid test or Quick Ratio
Current Ratio (CR) Formula
40. Price reduction for merchandise that has not lived up to buyers' expectations. Includes broken assortments of merchandise - merchandise lines that buyers no longer want to carry - shopworn goods - items that haven't sold because of an event beyond bu
Turnover Rate Formula
Pricing Errors
New Price
Clearance Markdowns
41. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Return on Net Worth
Gross Margin
Financial Leverage Ratio Formula
Initial Markup (IMU)
42. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Markdown optimization
Profit Margin Analysis Formula
Balance Sheet
Pricing Strategies: Price Zones
43. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Markdown Cancellation ($) Formula
Balance Sheet
Pricing Strategies: Price Zones
44. Total Expenses/ Net Sales
Expense Ratio Formula
Depreciation
Markup % of Cost Formula
Off-Price Markdown Percentage Formula
45. Also referred to as the income or operating statement. 5 Basic Elements: Net Sales - Cost of Goods sold - Gross Margin - Operating Expenses - Net profit
Dollar Markdown Formula
Markup % of Retail Formula
Pricing Strategies
Profit and Loss Statement (P&L Statement)
46. The energizing force that fuels and sustains our economic system
Pricing Strategies: Price Zones
Buying Errors
Profit
Debt Equity Ratio Formula
47. Net Profit After Taxes/ Total Assets
Markdown Percentage
Gross Margin
Expense Ratio Formula
Return on Assets (ROA) Formul
48. 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.
Inventory
Markdown Cancellation ($) Formula
Pricing Errors
Profit Margin
49. Original Retail price- markdown selling price
Dollar Markdown Formula
Markdown Percentage Formula
Planned Initial Markup % Formula
Promotional Markdown
50. Reduction in price of an item - if that item is sold - the result is a lower monetary intake for that item
Net Sales
Dollar Markdown Formula
Markdown
Markdown Cancellations