Question 1

gives the retailer a measure of how much profit it is making on merchandise sales without considering the expense associated with operating the store.

Accepted Answer

Gross margin measures the profit made on merchandise sales before accounting for operating expenses.

Question 2

The strategic profit model is useful to retailers because it:

Accepted Answer

The strategic profit model is useful because it incorporates return on assets, combines margin and asset management, and evaluates financial implications of strategies.

Question 3

How do you calculate net sales?

Accepted Answer

D

Question 4

The information used to analyze a firm's profit path comes from the:

Accepted Answer

The income statement provides information about a firm's revenues, expenses, and profits. This information can be used to analyze a firm's profit path, which is the trend of its profits over time.

Question 5

Anita purchased a king snake as a pet while she was away from home. When she arrived at her dorm, the resident supervisor reminded Anita of the "no pets" policy, and Anita had to bring the snake back to the store. The pet store's accounting department would enter this transaction as a:

Accepted Answer

The transaction would be recorded as a customer return because Anita returned the snake to the store due to the "no pets" policy at her dorm.

Question 6

Which of the following refers to the total number of dollars received by a retailer after all refunds have been paid to customers for returned merchandise?

Accepted Answer

Net sales refer to the total revenue from sales minus returns, allowances, and discounts, representing the actual revenue a retailer retains.

Question 7

Which of the following ratios is included as an integral part of the strategic profit model?

Accepted Answer

The answer of Which of the following ratios is included...

Question 8

All of the following are considered "assets" EXCEPT:

Accepted Answer

Notes payable is a liability, not an asset.

Question 9

Which of the following would have the lowest gross margins?

Accepted Answer

Walmart typically operates on a high-volume, low-margin business model, which means it has lower gross margins compared to other retailers that may focus on higher-margin products or services.

Question 10

Offering people unique merchandise, such as environmentally sensitive products, providing an innovative service to improve personal health, such as weight reduction programs, or sponsoring community events are all examples of:

Accepted Answer

These examples align with societal objectives as they aim to benefit society by promoting environmental awareness, improving personal health, and engaging with the community.

Question 11

Bernie wanted to know what the net sales and the net profit after tax were during the year 2004 for his nephew's business, The Big Man Shop. Bernie should look at the store's:

Accepted Answer

The income statement provides information on a company's revenues, expenses, and profits over a specific period, which includes net sales and net profit after tax.

Question 12

Which of the following would have the highest gross margin?

Accepted Answer

Luxury goods, such as those sold by Birks jewellers, typically have higher gross margins due to their premium pricing and brand value.

Question 13

Gross margin:

Accepted Answer

Gross margin is a performance measure, also known as gross profit, indicating how much profit a retailer makes on merchandise sales, and it can be expressed as a percentage of net sales.

Question 14

Why would a discount store have lower gross margins than a jewellery store?

Accepted Answer

Discount stores typically have a lower priced merchandise strategy, which results in lower gross margins compared to jewellery stores that sell higher-priced items with higher margins.

Question 15

Three types of objectives a retailer might have are:

Accepted Answer

The answer of Three types of objectives a retailer might...

Question 16

If a retailer wanted to compare its financial performance to its past performances, it would utilize the

Accepted Answer

The answer of If a retailer wanted to compare its...

Question 17

Which of the following calculations leads to gross margin?

Accepted Answer

The answer of Which of the following calculations leads to...

Question 18

Advantages of high inventory turnover include all of the following EXCEPT:

Accepted Answer

Increased cost of goods sold is not an advantage of high inventory turnover; it is a consequence of selling more inventory. High inventory turnover typically leads to benefits like increased sales volume, improved asset turnover, and reduced risk of obsolescence.

Question 19

Which of the following summarizes a firm's financial performance over a period of time?

Accepted Answer

The income statement summarizes a firm's financial performance over a period of time by showing its revenues, expenses, and profits.

Question 20

Why do retailers pursue different strategies when determining whether their return on investment is profitable?

Accepted Answer

The answer of Why do retailers pursue different strategies when...

Quiz 8: Financial Strategy