Question 1

The strategic profit model is useful to retailers because it

Accepted Answer

A)  is derived from the income statement. 
B)  uses owner's equity as its primary criterion. 
C)  uses inventory turnover as its primary criterion. 
D)  is derived from the balance sheet from the last day of the year. 
E)  combines profit margin management and asset management. 
A)  is derived from the income statement. 
B)  uses owner's equity as its primary criterion. 
C)  uses inventory turnover as its primary criterion. 
D)  is derived from the balance sheet from the last day of the year. 
E)  combines profit margin management and asset management. E

Question 2

Gross margin is the total revenues received by a retailer that are related to selling merchandise during a given time period minus returns, discounts, and credits for damaged merchandise.

Accepted Answer

A) True 
 B)False  False

Question 3

Identify and describe the two paths of activities that determine return on assets (ROA).

Accepted Answer

One path is profit margin management. The information used to examine the profit margin management path comes from the retailer's income statement, also called the statement of operations. The income statement summarizes a firm's financial performance over a period of time, typically a quarter (three months) or year. The four components in the profit margin management path are net sales, cost of goods sold (COGS), gross margin, and operating profit margin. The other path is asset management. The information used to analyze a retailer's asset management path primarily comes from the retailer's balance sheet. While the income statement summarizes financial performance over a period of time (usually a year or quarter), the balance sheet summarizes a retailer's financial position at a given point in time, typically the end of its fiscal year. Assets are economic resources (e.g., inventory, buildings, computers, store fixtures) owned or controlled by a firm. There are two types of assets, current and fixed.

Question 4

Cost of goods sold (COGS) includes what the retailer pays to suppliers for the merchandise the retailer sells.

Accepted Answer

A) True 
 B)False

Question 5

The strategic profit model decomposes ROA into two components

Accepted Answer

A)  operating profit margin percentage and asset turnover. 
B)  net sales and average organizational turnover. 
C)  gross sales and average employee productivity. 
D)  total number of employees and total sales volume. 
E)  average number of employees and average productivity. 
A)  operating profit margin percentage and asset turnover. 
B)  net sales and average organizational turnover. 
C)  gross sales and average employee productivity. 
D)  total number of employees and total sales volume. 
E)  average number of employees and average productivity.

Question 6

Self-gratification for the retailer is classified as a societal objective.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is classified as an asset?

Accepted Answer

A)  Debts 
B)  Buildings 
C)  Accrued wages 
D)  Deferred revenue 
E)  Interest payable 
A)  Debts 
B)  Buildings 
C)  Accrued wages 
D)  Deferred revenue 
E)  Interest payable

Question 8

Which of the following is not a component in the calculation of net sales?

Accepted Answer

A)  Gross sales 
B)  Customer returns 
C)  Promotional allowances 
D)  Interest 
A)  Gross sales 
B)  Customer returns 
C)  Promotional allowances 
D)  Interest

Question 9

Which of the following is used to assess overall performance at a corporate level?

Accepted Answer

A)  Asset 
B)  Square foot of selling space 
C)  The number of full-time employees 
D)  Comparable-store sales growth 
E)  Inventory 
A)  Asset 
B)  Square foot of selling space 
C)  The number of full-time employees 
D)  Comparable-store sales growth 
E)  Inventory

Question 10

How is gross margin percent calculated?

Accepted Answer

A)  Gross margin divided by net sales 
B)  Add operating and interest expenses together and divide by gross sales 
C)  Net sales multiplied by gross margin 
D)  Cost of goods sold divided by gross sales 
E)  Divide net profit by net sales 
A)  Gross margin divided by net sales 
B)  Add operating and interest expenses together and divide by gross sales 
C)  Net sales multiplied by gross margin 
D)  Cost of goods sold divided by gross sales 
E)  Divide net profit by net sales

Question 11

Tony wanted to know what the net sales and the net profit after tax were last year for his nephew's business, The Big Guy Shop. Tony should look at the store's

Accepted Answer

A)  balance sheet. 
B)  financial leverage statements. 
C)  strategic profit model. 
D)  profitability statement. 
E)  income statement. 
A)  balance sheet. 
B)  financial leverage statements. 
C)  strategic profit model. 
D)  profitability statement. 
E)  income statement.

Question 12

Second Chance is a paperback book exchange. For each book trade, the buyer pays a $1 trade fee. Books that are sold and not traded cost half of their original purchase price. The store has total assets of $126,000 and current assets of $40,200. Its net sales equaled $35,000, and its net profit after taxes was $9,000. Calculate the store's net profit percentage.

Accepted Answer

A)  7.1% 
B)  21.7% 
C)  22.4% 
D)  25.7% 
E)  27.7% 
A)  7.1% 
B)  21.7% 
C)  22.4% 
D)  25.7% 
E)  27.7%

Question 13

What does asset turnover measure?

Accepted Answer

A)  It is the retailer's gross sales divided by its net sales. 
B)  It is the retailer's total productivity divided by its net sales. 
C)  It is the retailer's average productivity divided by gross sales. 
D)  It is the retailer's net sales divided by its assets. 
E)  It is the retailer's total productivity divided by gross sales. 
A)  It is the retailer's gross sales divided by its net sales. 
B)  It is the retailer's total productivity divided by its net sales. 
C)  It is the retailer's average productivity divided by gross sales. 
D)  It is the retailer's net sales divided by its assets. 
E)  It is the retailer's total productivity divided by gross sales.

Question 14

If the executives for OfficeMax developed the chain's objectives by asking buyers and store managers to forecast sales and merchandise for the next year, and then transmitted those estimates up the organization to the top level, it would be an example of ________ planning.

Accepted Answer

A)  accountable 
B)  bottom-up 
C)  conventional 
D)  direct 
E)  functional 
A)  accountable 
B)  bottom-up 
C)  conventional 
D)  direct 
E)  functional

Question 15

A store that sells books, magazines, and newspapers has an average inventory of $15,000 at cost. Its cost of goods for the previous year was $62,000, and its net profit was $9,000. Calculate the retailer's inventory turnover.

Accepted Answer

A)  1.67 
B)  2.14 
C)  6.89 
D)  4.13 
E)  14.5 
A)  1.67 
B)  2.14 
C)  6.89 
D)  4.13 
E)  14.5

Question 16

Melanie's Bead Shoppe has total assets of $45,000, accounts receivable of $2,000, accounts payable of $3,100, and inventory valued at $20,000. Last year, her net sales were $29,000, and her operating profit margin equaled $14,000. What is her return on assets?

Accepted Answer

A)  31.1 percent 
B)  12.5 percent 
C)  7.0 percent 
D)  22.0 percent 
E)  48.3 percent 
A)  31.1 percent 
B)  12.5 percent 
C)  7.0 percent 
D)  22.0 percent 
E)  48.3 percent

Question 17

Which of the following is not an example of a fixed asset for a lawn care service?

Accepted Answer

A)  The trailer used to haul away debris 
B)  The plant nursery owned by the service 
C)  The bucket truck it uses to trim trees 
D)  A computer which is used to manage the store's inventory 
E)  Its accounts receivable 
A)  The trailer used to haul away debris 
B)  The plant nursery owned by the service 
C)  The bucket truck it uses to trim trees 
D)  A computer which is used to manage the store's inventory 
E)  Its accounts receivable

Question 18

Billie Jean's Bridals has total assets of $350,000, current assets of $74,000, total liabilities of $280,000, accounts receivable of $12,000, net sales of $64,000, and net profit after taxes of $23,000. Calculate the retailer's net profit percentage.

Accepted Answer

A)  18.75 percent 
B)  20 percent 
C)  25 percent 
D)  31.1 percent 
E)  35.9 percent 
A)  18.75 percent 
B)  20 percent 
C)  25 percent 
D)  31.1 percent 
E)  35.9 percent

Question 19

If you had $50,000 and you wanted to invest in stocks, you have two options. Which of the following ratios would best help you to decide on your investment?

Accepted Answer

A)  Inventory turnover 
B)  Asset turnover 
C)  Return on assets 
D)  Gross profit margin 
E)  Net profit margin 
A)  Inventory turnover 
B)  Asset turnover 
C)  Return on assets 
D)  Gross profit margin 
E)  Net profit margin

Question 20

Inventory turnover

Accepted Answer

A)  is calculated by dividing accounts receivable by net sales. 
B)  equals total assets minus current assets divided by average inventory. 
C)  is calculated by dividing cost of goods sold by average inventory. 
D)  equals net sales minus cost of goods sold divided by average turnover. 
E)  is calculated by dividing accounts receivable by average inventory. 
A)  is calculated by dividing accounts receivable by net sales. 
B)  equals total assets minus current assets divided by average inventory. 
C)  is calculated by dividing cost of goods sold by average inventory. 
D)  equals net sales minus cost of goods sold divided by average turnover. 
E)  is calculated by dividing accounts receivable by average inventory.

The strategic profit model is useful to retailers because it

Gross margin is the total revenues received by a retailer that are related to selling merchandise during a given time period minus returns, discounts, and credits for damaged merchandise.

Identify and describe the two paths of activities that determine return on assets (ROA).

Cost of goods sold (COGS) includes what the retailer pays to suppliers for the merchandise the retailer sells.

The strategic profit model decomposes ROA into two components

Self-gratification for the retailer is classified as a societal objective.

Which of the following is classified as an asset?

Which of the following is not a component in the calculation of net sales?

Which of the following is used to assess overall performance at a corporate level?

How is gross margin percent calculated?

Tony wanted to know what the net sales and the net profit after tax were last year for his nephew's business, The Big Guy Shop. Tony should look at the store's

What does asset turnover measure?

If the executives for OfficeMax developed the chain's objectives by asking buyers and store managers to forecast sales and merchandise for the next year, and then transmitted those estimates up the organization to the top level, it would be an example of ________ planning.

A store that sells books, magazines, and newspapers has an average inventory of $15,000 at cost. Its cost of goods for the previous year was $62,000, and its net profit was $9,000. Calculate the retailer's inventory turnover.

Melanie's Bead Shoppe has total assets of $45,000, accounts receivable of $2,000, accounts payable of $3,100, and inventory valued at $20,000. Last year, her net sales were $29,000, and her operating profit margin equaled $14,000. What is her return on assets?

Which of the following is not an example of a fixed asset for a lawn care service?

Billie Jean's Bridals has total assets of $350,000, current assets of $74,000, total liabilities of $280,000, accounts receivable of $12,000, net sales of $64,000, and net profit after taxes of $23,000. Calculate the retailer's net profit percentage.

If you had $50,000 and you wanted to invest in stocks, you have two options. Which of the following ratios would best help you to decide on your investment?

Inventory turnover

Introduction to the World of Retailing

Types of Retailers

Multichannel and Omnichannel Retailing

Customer Buying Behavior

Retail Market Strategy

Retail Locations

Retail Site Location

Information Systems and Supply Chain Management

Customer Relationship Management

Managing the Merchandise Planning Process

Buying Merchandise

Retail Pricing

Retail Communication Mix

Human Resources and Managing the Store

Store Layout, Design, and Visual Merchandising

Customer Service

Filters

Exam 6: Financial Strategy

The strategic profit model is useful to retailers because it

Gross margin is the total revenues received by a retailer that are related to selling merchandise during a given time period minus returns, discounts, and credits for damaged merchandise.

Identify and describe the two paths of activities that determine return on assets (ROA).

Cost of goods sold (COGS) includes what the retailer pays to suppliers for the merchandise the retailer sells.

The strategic profit model decomposes ROA into two components

Self-gratification for the retailer is classified as a societal objective.

Which of the following is classified as an asset?

Which of the following is not a component in the calculation of net sales?

Which of the following is used to assess overall performance at a corporate level?

How is gross margin percent calculated?

Tony wanted to know what the net sales and the net profit after tax were last year for his nephew's business, The Big Guy Shop. Tony should look at the store's

What does asset turnover measure?

If the executives for OfficeMax developed the chain's objectives by asking buyers and store managers to forecast sales and merchandise for the next year, and then transmitted those estimates up the organization to the top level, it would be an example of ________ planning.

A store that sells books, magazines, and newspapers has an average inventory of $15,000 at cost. Its cost of goods for the previous year was $62,000, and its net profit was $9,000. Calculate the retailer's inventory turnover.

Melanie's Bead Shoppe has total assets of $45,000, accounts receivable of $2,000, accounts payable of $3,100, and inventory valued at $20,000. Last year, her net sales were $29,000, and her operating profit margin equaled $14,000. What is her return on assets?

Which of the following is not an example of a fixed asset for a lawn care service?

Billie Jean's Bridals has total assets of $350,000, current assets of $74,000, total liabilities of $280,000, accounts receivable of $12,000, net sales of $64,000, and net profit after taxes of $23,000. Calculate the retailer's net profit percentage.

If you had $50,000 and you wanted to invest in stocks, you have two options. Which of the following ratios would best help you to decide on your investment?

Inventory turnover

Introduction to the World of Retailing

Types of Retailers

Multichannel and Omnichannel Retailing

Customer Buying Behavior

Retail Market Strategy

Retail Locations

Retail Site Location

Information Systems and Supply Chain Management

Customer Relationship Management

Managing the Merchandise Planning Process

Buying Merchandise

Retail Pricing

Retail Communication Mix

Human Resources and Managing the Store

Store Layout, Design, and Visual Merchandising

Customer Service

Filters