The objective of this assignment is to reinforce understanding of one of the crucial concepts in retail management - "finance."

Retailers can have a huge revenue stream, and yet not be profitable. What could be the problem: too high of an operational expense? Was the margin set correctly? Was the inventory budgeting planned correctly? Was the cashflow managed correctly? Perhaps the accounts receivable was too high? Questions:

1. It costs money to carry inventory, yet retailers must carry an amount of inventory in excess of planned sales for an upcoming period. Explain why this statement is true using critical thinking and concepts introduced in the textbook.
2. Why should a retailer be allowed to change its merchandise budget after the start of a season? Explain why this statement is true using critical thinking and concepts introduced in the textbook.
3. If changes can be made, what would cause such changes? Explain why this statement is true using critical thinking and concepts introduced in the textbook.
4. In what ways are the balance sheet and the income statement different? a. Point of difference 1 b. Point of difference 2
5. How do retailers use these two financial statements? a. How is balance sheet used? Be specific. b. How is Income statement used? Be Specific.
6. You are working as a loan officer at a local bank. Earlier today, a former high-school classmate came in to see you about a loan for a family's retail business. After looking over the store's financial statements, you notice that the store is posting a strong net income growth. However, these statements also reveal that the store has a negative cash flow for the last two years and that account receivables have almost doubled over the same time span. Why should this concern you? a. Reason 1 this should be of concern. Explain in detail. b. Reason 2 this should be of concern. Explain in detail.
7. List the advantages and disadvantages the retail method of inventory valuation has over the cost method. a. Advantage 1. b. Advantage 2. c. Disadvantage 1. d. Disadvantage 2.
8. Define FIFO and LIFO. a. What is FIFO b. When is this method good to use? c. What is LIFO d. When is this method good to use?