22 terms

Merchandising 135

Chapter 10
STUDY
PLAY
Assets
that which is owned by an organization; cash, inventory, store fixtures.
Short term/current assets
converts to cash within a year in the normal operation of business.
Long term/noncurrent assets
cash not converted within a year.
Assets Equation
Assets=liabilities+owners equity
Balance Sheet
statement of an organizations assets, liabilities, and owner's equity at a particular point in time.
Cash Discount
invoice concessions from suppliers for prompt payment
Cash Flow
the balance of cash coming into and going out of an organization.
Positive cash flow: more cash is coming into organization than going out
Component Percentage
ratio of one part of income statment to another, usually to net sales
used to make comparisons among stores easier and evaluate a departments performance over time
Cost of Goods Sold
=cost of merchandise+shipping+workroom costs-cash discounts
Current Ratio
the relationship between current assets and current liabilities
-measures an organization's short term debt paying ability, or ability to pay off current debts with current assets
Current Ratio Equation
=current assets/current liabilities
Direct Expense
attributable to a specific unit of business(department)
-includes wages, advertising, rent.
Gross Sales
=Net(total) sales+customer returns
Income Statement
statement of performance for a given period of time.
-Components: net revenue, cost of goods sold, gross margin, expenses, net income.
Profit
when revenue exceeds expenses
Loss
when expenses exceeds revenue
Indirect Expense
Not directly attributed to a specific unit; utilities, interest on debt.
Liabilities
debts owed by an organization
-classified according to the time in which they are due to be paid
Liquidity
te likelihood of assets conversion to cash
Net Income
Earnings before taxes
-Can be increased by an increasing sales, gross margin;decreasing cost of goods sold, expenses.
=(gross margin)revenue-expenses
Net Sales
revenue sources which may includ rent from leasing property or interest an accounts receivable.
-Always 100%
=gross(total) sales-customer returns
Owner's Equity
difference between assets and liabilites