Airport Financial Management Flashcards
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Read the first 7 Airport Financial Management flashcards as text
Which financial document provides a snapshot of an airport's assets, liabilities, and net position at a specific point in time?
Answer: Balance sheet
A balance sheet (statement of net position) captures assets, liabilities, and equity at a single date.
An airport's operating ratio is calculated by dividing total operating expenses by:
Answer: Total operating revenues
The operating ratio = total operating expenses ÷ total operating revenues, measuring cost efficiency.
What does the term 'residual cost' signify in an airport use agreement?
Answer: Airlines cover all airport costs not recovered from other sources
Under residual cost agreements, signatory airlines are responsible for the net costs after other revenues are applied.
Which metric measures how many times an airport can cover its annual debt service from net revenues?
Answer: Debt service coverage ratio
The debt service coverage ratio (DSCR) = net revenues ÷ annual debt service, indicating bond repayment capacity.
Federal grant funds received by airports through the AIP are primarily used for:
Answer: Capital improvement projects
Airport Improvement Program (AIP) grants fund eligible capital projects such as runways, taxiways, and safety equipment.
An airport's 'net revenue' in the context of revenue bond covenants typically means:
Answer: Gross revenues minus operating and maintenance expenses
Net revenue for bond covenant purposes equals gross revenues less operating and maintenance (O&M) expenses.
Which budgeting approach requires managers to justify every expenditure from scratch each year rather than basing the budget on the prior year?
Answer: Zero-based budgeting
Zero-based budgeting (ZBB) starts from zero and requires full justification for each line item every cycle.