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

A balance sheet (statement of net position) captures assets, liabilities, and equity at a single date.

Question 2

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

Accepted Answer

Total operating revenues

Answer

The operating ratio = total operating expenses ÷ total operating revenues, measuring cost efficiency.

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

Under residual cost agreements, signatory airlines are responsible for the net costs after other revenues are applied.

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

The debt service coverage ratio (DSCR) = net revenues ÷ annual debt service, indicating bond repayment capacity.

Question 5

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

Accepted Answer

Capital improvement projects

Answer

Airport Improvement Program (AIP) grants fund eligible capital projects such as runways, taxiways, and safety equipment.

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