ACE Airport Financial Management 2

Question 1

Which financial document provides a snapshot of an airport's assets, liabilities, and net position at a specific point in time?

Accepted Answer

Balance sheet

Answer

Income statement

Answer

Cash flow statement

Answer

Budget variance report

Question 2

An airport's operating ratio is calculated by dividing total operating expenses by:

Accepted Answer

Total operating revenues

Answer

Net income

Answer

Total assets

Answer

Capital expenditures

Question 3

What does the term 'residual cost' signify in an airport use agreement?

Accepted Answer

Airlines cover all airport costs not recovered from other sources

Answer

Airlines pay only variable costs

Answer

Costs are split equally among tenants

Answer

Only non-aeronautical revenues fund operations

Question 4

Which metric measures how many times an airport can cover its annual debt service from net revenues?

Accepted Answer

Debt service coverage ratio

Answer

Current ratio

Answer

Quick ratio

Answer

Leverage ratio

Question 5

Federal grant funds received by airports through the AIP are primarily used for:

Accepted Answer

Capital improvement projects

Answer

Terminal retail concessions

Answer

Airline employee wages

Answer

Marketing campaigns

Question 6

An airport's 'net revenue' in the context of revenue bond covenants typically means:

Accepted Answer

Gross revenues minus operating and maintenance expenses

Answer

Gross revenues minus all capital expenses

Answer

Total non-aeronautical revenues only

Answer

Revenues after airline fee credits are applied

Question 7

Which budgeting approach requires managers to justify every expenditure from scratch each year rather than basing the budget on the prior year?

Accepted Answer

Zero-based budgeting

Answer

Incremental budgeting

Answer

Capital budgeting

Answer

Rolling forecast budgeting