Final answer:
The cost-to-retail ratio is the ratio of the cost price to the retail price of a product, used in inventory accounting to convert the retail value of inventory to its cost value. It is distinct from other measures like the four-firm concentration ratio, which assesses industry competition levels.
Step-by-step explanation:
The cost-to-retail ratio is a concept used in inventory accounting, specifically under the Retail Inventory Method. Option 4)- the ratio of the cost price to the retail price of a product, best defines this term. The cost-to-retail ratio is determined by dividing the cost of goods available for sale by the retail value of the goods available for sale. This ratio is then used to convert ending inventory from retail to cost.
It's important to note that the ratio is distinct from other measurements of marketplace dynamics, such as the four-firm concentration ratio, which gauges competition within an industry by measuring the total sales percentages of the top four firms.
Understanding this ratio is key for businesses in effectively managing their inventories. In contrast, strategies like bundling, exclusive dealing, and regulation strategies like cost-plus regulation are tactics used by firms to handle different aspects of their market activities, pricing, and relationships with other businesses or regulators.