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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. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Profit Margin Analysis Formula
Cumulative Markup
Return on Sales
Turnover Rate Formula
2. Cost + Markup
Markdown Cancellations
Buying Errors
Current Assets
Selling Price Formula
3. Statistical forecasting tool that helps retailers to predict how apparel markdowns may affect the bottom-line business and objectives before the markdowns are implemented
Clearance Markdowns
Pricing Depends on 2 factors
Markdown optimization
Financial Leverage Ratio
4. 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
Early Markdowns
Cost of Goods Sold (COGS) Formula
Financial Leverage Ratio
Current Ratio (CR) Formula
5. 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.
Pricing Strategies: Price Zones
Financial Leverage Ratio Formula
Dollar Markdown Formula
Inventory
6. 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
New Price
Current Ratio
Debt Equity Ratio
Financial Leverage Ratio Formula
7. Buying errors - promotion errors - pricing errors - uncontrollable errors
Markdown Cancellation ($) Formula
Reasons for taking Markdowns
Gross Margin Return on Inventory Investment-GMROI Formula
Ideal Markdown
8. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Current Ratio
Expense Ratio Formula
Return on Net Worth
Price Sensitivity
9. The number of items remaining in stock x dollar markdown
Markdown
Markdown Cancellation ($) Formula
Acid Test or Quick Ratio (QR) Formula
Inventory
10. Improper displays - merchandise returns due to high pressure selling
Markdown Optimization
Promotion Errors
Net Sales
Fixed Liabilities
11. Sales for the period/ average inventory
Turnover Rate Formula
FIFO (First in - First out)
Buying Errors
Promotion Errors
12. Total Expenses/ Net Sales
Retail Inventory Method
Operating Expenses
Expense Ratio Formula
Markdown Optimization
13. 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
Assets
Regular Price
Assets Formula
14. Price is changed (up or down)
New Price
Debt Equity Ratio Formula
FIFO (First in - First out)
5 Steps of Retail Inventory Method
15. Net Profit/ Net Sales
Pricing Depends on 2 factors
Turnover Rate Formula
Liabilities
Profit Margin Analysis Formula
16. 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)
Forced Obsolescence
Cost of Goods Sold (COGS) Formula
Retail Price Formula
17. The weather - merchandise is shopworn - economic downturn
Cash Flow Formula
Uncontrollable Errors
GMROII (Gross Margin Return on Inventory Investment)
Cost of Goods Sold
18. 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.
Net Sales
New Price
Acid test or Quick Ratio
Markdown
19. Represents the total dollar markdown as a percentage of total dollar net sales. This is typically not for an individual item.
Markdown Percentage
Original Price
Adage of Profitability for Retailers
Markdown optimization
20. The energizing force that fuels and sustains our economic system
Current Liabilities
Markdown Optimization
Pricing Strategies: Price Zones
Profit
21. When new styles or models come out every year - thus forcing the obsolescence of the previous year's model
Ideal Markdown
Debt Equity Ratio
Forced Obsolescence
Inventory
22. Net Profit After Taxes/ Total Assets
Loss-Leader
Return on Assets (ROA) Formul
Forced Obsolescence
Financial Leverage Ratio
23. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Debt Equity Ratio Formula
Clearance Markdowns
Forced Obsolescence
24. Liabilities+ Owner's equity or net worth
Return on Assets (ROA) Formul
Depreciation
Operating Expenses
Assets Formula
25. What the retailer owns in monetary value
Assets
Return on Sales
Accounts Receivable (AR)
GMROII (Gross Margin Return on Inventory Investment)
26. 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.
Net Sales
Markdown Cancellation ($) Formula
Off-Price Markdowns
Promotional Markdown
27. Promotional markdown that involves selling at or near cost for promotional purposes
Accounts Receivable (AR)
Loss-Leader
Current Ratio
Assets Formula
28. Financial obligations that require payment within a short period of time (Wages - utitilites - Insurance)
Promotional Markdown
Current Liabilities
Pricing Depends on 2 factors
Promotion Errors
29. One that is just enough to move the goods
Return on Sales
Markdown Percentage
Ideal Markdown
Assets Formula
30. Total Markup on all goods on hand/ retail price of all goods on hand
LIFO (last in - first out)
Markdown Cancellation ($) Formula
Cumulative Markup % Formula
Profit Margin
31. Usually lower than original - but held for longer period
Return on Net Worth
Pricing Strategies: Price Lining
Planned Initial Markup % Formula
Regular Price
32. 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
Clearance Markdowns
Expense Ratio
Cumulative Markup
Forced Obsolescence
33. (Cash + Accounts Receivable) / Current Liabilities
Price Sensitivity
Operating Expenses
Current Ratio (CR) Formula
Acid Test or Quick Ratio (QR) Formula
34. Evaluates the managament of capital
Cumulative Markup % Formula
Promotion Errors
Return on Sales
Loss-Leader
35. Current Liabilites/ Net Worth
Acid Test or Quick Ratio (QR) Formula
Pricing Errors
Profit and Loss Statement (P&L Statement)
Debt Equity Ratio Formula
36. Financial debts incurred by a retailer
Markup % of Cost Formula
Markdown Percentage Formula
Liabilities
Cost of Goods Sold (COGS) Formula
37. Debts owned by a retailer that require payment over an extended period of time (Fixtures - equipment - and property)
Retail Inventory Method
Gross Margin
Fixed Liabilities
Expense Ratio Formula
38. 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
Current Ratio (CR) Formula
Markdown
FIFO (First in - First out)
Current Liabilities
39. The prices from lowest to highest that are carried within a merchandise category
Ideal Markdown
Late Markdowns
Pricing Strategies: Price Ranges
Fixed Assets
40. 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
LIFO (last in - first out)
Cost of Goods Sold (COGS) Formula
Cumulative Markup % Formula
Financial Leverage Ratio
41. Beggining inventory for a time period+ purchases=merchandise available for sale- ending inventory
Uncontrollable Errors
Markup % of Retail Formula
Current Liabilities
Cost of Goods Sold (COGS) Formula
42. Cash Received by the retailer-cash leaving the retailer
Return on Net Worth (RONW) Formula
Cash Flow Formula
Forced Obsolescence
Return on Assets
43. 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
Fixed Liabilities
GMROII (Gross Margin Return on Inventory Investment)
Current Ratio
5 Steps of Retail Inventory Method
44. Can be transformed simply and rapidly into cash
Markup % of Cost Formula
Current Assets
Cumulative Markup % Formula
Buying Errors
45. 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
Pricing Errors
Acid test or Quick Ratio
Pricing Depends on 2 factors
5 Steps of Retail Inventory Method
46. 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.
FIFO (First in - First out)
Accounts Receivable (AR)
Cost of Goods Sold
Markup % of Cost Formula
47. Cost Price/ (100%-markup %)
Pricing Strategies: Price Ranges
Planned Initial Markup % Formula
Retail Price Formula
Off-Price Markdown Percentage Formula
48. The value of this calculation is that consumers can understand the price reduction when the retailer is promoting this merchandise.
Markup % of Cost Formula
Adage of Profitability for Retailers
Debt Equity Ratio
Off-Price Markdowns
49. 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
5 Steps of Retail Inventory Method
Off-Price Markdown Percentage Formula
Pricing Strategies
50. Costs involved in running the business
Accounts Receivable (AR)
Inventory
Operating Expenses
Depreciation