M100: Introduction to Merchandising
Study Guide (2025/2026 Syllabus)
FINAL EXAM UPDATED 2025/2026
COMPLETE QUESTIONS WITH CORRECT
DETAILED ANSWERS AND RATIONALES ||
100% GUARANTEED PASS||<<LATEST
VERSION>>
Exam Focus: This exam tests your knowledge of fundamental merchandising concepts,
including retail math, inventory management, product life cycle, and the role of a
merchandiser within a retail organization.
Section 1: Retail Math & Analytics
1. What is the formula for calculating Gross Margin?
ANSWER ✓ Gross Margin = Net Sales - Cost of Goods Sold (COGS). It is often
expressed as a percentage: (Gross Margin / Net Sales) * 100.
2. A product sells for $150 and costs the store $75. What is the gross margin in
dollars and as a percentage?
ANSWER ✓ Gross Margin ($) = $150 - $75 = $75. Gross Margin (%) = ($75 / $150) * 100
= 50%.
3. Define and calculate Markup. Using the previous numbers ($150 retail, $75
cost), what is the markup percentage?
, ANSWER ✓ Markup is the amount added to the cost price to determine the selling
price. Markup (%) = ((Retail Price - Cost Price) / Cost Price) * 100. Therefore, (($150 -
$75) / $75) * 100 = 100%.
4. What is the key difference between Gross Margin and Markup?
ANSWER ✓ The denominator. Gross Margin uses Net Sales as the denominator, while
Markup uses Cost of Goods Sold. This means the same dollar amount will represent a
different percentage for each metric.
5. What does Sell-Through Percentage measure?
ANSWER ✓ It measures the percentage of units sold compared to the units originally
received from inventory. Formula: (Units Sold / Units Received) * 100.
6. You receive 200 units of a new sweater. In the first week, you sell 45 units. What
is the sell-through percentage?
ANSWER ✓ Sell-Through % = () * 100 = 22.5%.
7. What is Open-To-Buy (OTB) and why is it crucial for merchandisers?
ANSWER ✓ Open-To-Buy is the planned dollar amount a buyer can spend on new
inventory for a specific period. It is crucial because it prevents overstocking and
understocking, ensuring optimal inventory levels align with sales plans and budgets.
8. Calculate OTB: Planned Sales = $50,000, Planned End-of-Month Inventory =
$100,000, Beginning-of-Month Inventory = $90,000.
ANSWER ✓ OTB = (Planned Sales + Planned EOM Inventory) - Beginning Inventory.
OTB = ($50,000 + $100,000) - $90,000 = $60,000.
9. What is the formula for Stock Turnover (Inventory Turnover)?
ANSWER ✓ Stock Turnover = Net Sales / Average Retail Inventory. It can also be
calculated in units: Units Sold / Average Inventory.
10. If a department has annual net sales of $1,000,000 and an average retail
inventory of $200,000, what is the turnover?
ANSWER ✓ Turnover = $1,000,000 / $200,000 = 5.0 times.
11. A high stock turnover rate generally indicates what?
Study Guide (2025/2026 Syllabus)
FINAL EXAM UPDATED 2025/2026
COMPLETE QUESTIONS WITH CORRECT
DETAILED ANSWERS AND RATIONALES ||
100% GUARANTEED PASS||<<LATEST
VERSION>>
Exam Focus: This exam tests your knowledge of fundamental merchandising concepts,
including retail math, inventory management, product life cycle, and the role of a
merchandiser within a retail organization.
Section 1: Retail Math & Analytics
1. What is the formula for calculating Gross Margin?
ANSWER ✓ Gross Margin = Net Sales - Cost of Goods Sold (COGS). It is often
expressed as a percentage: (Gross Margin / Net Sales) * 100.
2. A product sells for $150 and costs the store $75. What is the gross margin in
dollars and as a percentage?
ANSWER ✓ Gross Margin ($) = $150 - $75 = $75. Gross Margin (%) = ($75 / $150) * 100
= 50%.
3. Define and calculate Markup. Using the previous numbers ($150 retail, $75
cost), what is the markup percentage?
, ANSWER ✓ Markup is the amount added to the cost price to determine the selling
price. Markup (%) = ((Retail Price - Cost Price) / Cost Price) * 100. Therefore, (($150 -
$75) / $75) * 100 = 100%.
4. What is the key difference between Gross Margin and Markup?
ANSWER ✓ The denominator. Gross Margin uses Net Sales as the denominator, while
Markup uses Cost of Goods Sold. This means the same dollar amount will represent a
different percentage for each metric.
5. What does Sell-Through Percentage measure?
ANSWER ✓ It measures the percentage of units sold compared to the units originally
received from inventory. Formula: (Units Sold / Units Received) * 100.
6. You receive 200 units of a new sweater. In the first week, you sell 45 units. What
is the sell-through percentage?
ANSWER ✓ Sell-Through % = () * 100 = 22.5%.
7. What is Open-To-Buy (OTB) and why is it crucial for merchandisers?
ANSWER ✓ Open-To-Buy is the planned dollar amount a buyer can spend on new
inventory for a specific period. It is crucial because it prevents overstocking and
understocking, ensuring optimal inventory levels align with sales plans and budgets.
8. Calculate OTB: Planned Sales = $50,000, Planned End-of-Month Inventory =
$100,000, Beginning-of-Month Inventory = $90,000.
ANSWER ✓ OTB = (Planned Sales + Planned EOM Inventory) - Beginning Inventory.
OTB = ($50,000 + $100,000) - $90,000 = $60,000.
9. What is the formula for Stock Turnover (Inventory Turnover)?
ANSWER ✓ Stock Turnover = Net Sales / Average Retail Inventory. It can also be
calculated in units: Units Sold / Average Inventory.
10. If a department has annual net sales of $1,000,000 and an average retail
inventory of $200,000, what is the turnover?
ANSWER ✓ Turnover = $1,000,000 / $200,000 = 5.0 times.
11. A high stock turnover rate generally indicates what?
