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Test your basic knowledge |
Retail Financials
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Study First
Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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 extent to which a retailer is using debt or borrowed funds to operate the business. (The higher the FLR the higher the debt)
Depreciation
Cost of Goods Sold (COGS) Formula
Regular Price
Financial Leverage Ratio
2. 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
Cumulative Markup % Formula
Planned Initial Markup % Formula
Cumulative Markup
3. 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
Pricing Strategies: Price Ranges
Regular Price
LIFO (last in - first out)
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
Liabilities
Profit and Loss Statement (P&L Statement)
Early Markdowns
Markup % of Retail Formula
5. Gross margin less operating expenses=NP before taxes. Deducting taxes=NP after taxes
Inventory
Net Profit
Return on Assets
Regular Price
6. Priced too high initially - priced too low - selling price of competitors
Return on Net Worth (RONW) Formula
Pricing Errors
Pricing Strategies: Price Ranges
Acid test or Quick Ratio
7. Cost + Markup
Selling Price Formula
Pricing Strategies: Price Lining
Markdown Cancellation ($) Formula
Markdown optimization
8. Current Assets/ Current Liabilities
Selling Price Formula
Fixed Assets
Current Ratio (CR) Formula
Inventory
9. 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.
Markdown Percentage Formula
Accounts Receivable (AR)
Pricing Errors
Markdown Percentage
10. 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
Ideal Markdown
Reasons for taking Markdowns
Operating Expenses
11. 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
Original Price
Current Ratio
Markup % of Cost Formula
Acid Test or Quick Ratio (QR) Formula
12. 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
Regular Price
Markdown Cancellations
New Price
Early Markdowns
13. Promotional markdown that involves selling at or near cost for promotional purposes
Liabilities
Loss-Leader
Planned Initial Markup % Formula
Assets
14. What the retailer owns in monetary value
Assets
Cash Flow Formula
Acid test or Quick Ratio
Operating Expenses
15. When fixed assets such as fixtures and equipment are continually used and therefore lose some of their monetary value (Ex: your car)
Depreciation
Profit Margin Analysis Formula
Pricing Strategies: Price Zones
Assets
16. Net Profit After Taxes/ Total Assets
Regular Price
Off-Price Markdown Percentage Formula
Return on Assets (ROA) Formul
Promotional Markdown
17. Merchandise will sell at highest price longer period of time - appear exclusive - sale of goods at regular price is not disrupted - greater amount of goods can be accumulated and then marked down.
Assets Formula
Late Markdowns
Return on Net Worth
Early Markdowns
18. Revenues received by a retailer
Fixed Assets
Profit
Net Sales
Markdown Percentage Formula
19. Short time - like 1 or 2 day sales
Retail Inventory Method
Temporary Price Reduction
Net Sales
Current Assets
20. The prices from lowest to highest that are carried within a merchandise category
Profit Margin
Pricing Errors
Pricing Strategies: Price Ranges
Ideal Markdown
21. Price is changed (up or down)
Current Assets
Retail Price Formula
New Price
Current Ratio (CR) Formula
22. 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
Sell-Through Rate
FIFO (First in - First out)
Net Profit
23. The difference between the total delivered cost and the total retail price of merchandise handled during a given period.
Liabilities
Markdown Percentage Formula
Assets
Cumulative Markup
24. Price change that results in reestablishing the original retail price to merchandise after it was temporarily marked down
Buying Errors
Original Price
Markdown Cancellations
New Price
25. Sales less cost of goods sold
Debt Equity Ratio Formula
Gross Margin
Cumulative Markup % Formula
Dollar Markdown Formula
26. Inventory Valuation Method that combines taking inventory at retail prices and adjusting the cost value to reflect current retail value. 5 Steps Involved.
The Cost Method
Cumulative Markup % Formula
Early Markdowns
Retail Inventory Method
27. (1) Response of consumers and (2) cost of receiving - handling - and placing merchandise for sale.
Expense Ratio
Pricing Depends on 2 factors
Markup % of Cost Formula
Profit
28. Dollar markup ($)/ cost price ($)
GMROII (Gross Margin Return on Inventory Investment)
Depreciation
Markup % of Cost Formula
Markdown Optimization
29. 1. Determine merchandise available for sale at both cost and retail prices. 2.Calculate the cost to retail complement or percentage relationship of the cost of merchandise to the selling price. 3. Subtract markdowns taken during the period. 4. Determ
Temporary Price Reduction
Initial Markup (IMU)
Pricing Depends on 2 factors
5 Steps of Retail Inventory Method
30. Current Liabilites/ Net Worth
Markdown Percentage
Promotional Markdown
Pricing Strategies: Price Lining
Debt Equity Ratio Formula
31. Usually lower than original - but held for longer period
Regular Price
Markdown Percentage Formula
Net Sales
Turnover Rate Formula
32. Dollar markup ($)/ retail price ($)
Expense Ratio
Markup % of Retail Formula
Temporary Price Reduction
Current Ratio
33. (Cash + Accounts Receivable) / Current Liabilities
Acid Test or Quick Ratio (QR) Formula
Return on Assets
Profit and Loss Statement (P&L Statement)
Profit Margin Analysis Formula
34. Can be transformed simply and rapidly into cash
Original Price
Markdown Cancellation ($) Formula
Cumulative Markup % Formula
Current Assets
35. An aggregate of the original selling price. Should cover all expenses of the store - desired profit - take into account price reductions - alteration costs.
Sell-Through Rate
Net Sales
Cumulative Markup
Initial Markup (IMU)
36. Having the right merchandise - at the right time - for the right price - in the right place
Return on Net Worth
Markup % of Cost Formula
Return on Assets
Adage of Profitability for Retailers
37. Cannot be readily converted to cash within one year. (Fixtures - equipment - land/buildings)
Off-Price Markdowns
Fixed Assets
Ideal Markdown
Profit Margin
38. Strategy employed by retailers to buy and carry a predetermined number of price lines for a category of merchandise
Return on Net Worth (RONW) Formula
Pricing Strategies: Price Lining
Return on Assets
Assets
39. Assesses the retailers ability to realize adequate return on the money that is invested by the retail owner.
Gross Margin
GMROII (Gross Margin Return on Inventory Investment)
Pricing Strategies: Price Lining
Return on Net Worth
40. Original Retail price- markdown selling price
Net Sales
Ideal Markdown
Markdown Percentage Formula
Dollar Markdown Formula
41. Costs involved in running the business
Ideal Markdown
Inventory
Operating Expenses
Profit Margin
42. (gross margin % x Turnover) / (100%-markup %)
Gross Margin Return on Inventory Investment-GMROI Formula
Off-Price Markdown Percentage Formula
Current Assets
Markup
43. 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
Initial Markup (IMU)
Return on Assets (ROA) Formul
Net Sales
FIFO (First in - First out)
44. Evaluates the managament of capital
Return on Assets
Markdown Optimization
Return on Sales
Balance Sheet
45. First price or Manufacturers suggestet Retal Price (MSRP)
Debt Equity Ratio Formula
Markdown Cancellation ($) Formula
Markdown Percentage
Original Price
46. To make a profit buyers must set an appropriate price considering many variables and using past experience and knowledge of future trends. A markup on an item does not typically remain constant.
Acid Test or Quick Ratio (QR) Formula
Markup
Ideal Markdown
Debt Equity Ratio
47. Dollar Markdown of Merchandise/ original retail selling price of merchandise being marked down
Markdown Cancellation ($) Formula
Cumulative Markup
Off-Price Markdown Percentage Formula
Cash Flow Formula
48. The weather - merchandise is shopworn - economic downturn
Current Ratio
Uncontrollable Errors
Net Sales
Markup % of Retail Formula
49. Cash Received by the retailer-cash leaving the retailer
Accounts Receivable (AR)
Cash Flow Formula
Selling Price Formula
5 Steps of Retail Inventory Method
50. Cost Price/ (100%-markup %)
Assets Formula
Late Markdowns
Buying Errors
Retail Price Formula
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