CRA CRA Retail Financial Analysis & Metrics 2

Question 1

What is GMROI and what does it evaluate?

Accepted Answer

Gross Margin Return on Inventory Investment — profitability of inventory investment

Answer

GMROI (Gross Margin Return on Inventory Investment) measures how much gross profit is earned for every dollar invested in inventory.

Question 2

A retailer's operating expense ratio increased while revenue was flat. What is the likely financial impact?

Accepted Answer

Compressed operating profit margins

Answer

When operating expenses grow as a share of flat revenue, operating profit margins shrink because costs are consuming more of each sales dollar.

Question 3

What does 'weeks of supply' (WOS) indicate in retail planning?

Accepted Answer

How many weeks current inventory will last at the current sales rate

Answer

Weeks of supply is calculated as on-hand inventory divided by average weekly sales rate, showing how long stock will last.

Question 4

Which pricing strategy sets prices based on what competitors charge for similar products?

Accepted Answer

Competitive pricing

Answer

Competitive pricing benchmarks prices against competitors to stay in line with or undercut the market, regardless of internal costs.

Question 5

What is markdown optimization in retail financial planning?

Accepted Answer

Strategically timing and sizing price reductions to maximize sell-through and margin

Answer

Markdown optimization uses analytics to determine the best timing, depth, and sequence of price reductions to clear inventory while preserving margin.

(CRA) Certified Retail Analyst Practice Test

(CRA) Certified Retail Analyst Practice Test

CRA CRA Retail Financial Analysis & Metrics 2