Financial Management and Budgeting Flashcards
6 cards from real CAPS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Management and Budgeting flashcards as text
What does Net Operating Income (NOI) represent in apartment portfolio management?
Answer: Gross revenue minus all operating expenses excluding debt service
NOI is calculated as gross revenue minus all operating expenses, excluding debt service, depreciation, and income taxes.
Which metric best measures the return on a portfolio property relative to its purchase price?
Answer: Cap Rate
Capitalization rate (Cap Rate) is calculated as NOI divided by property value and measures return relative to purchase price.
A CAPS manager notices a property's vacancy rate climbed from 5% to 10%. What is the most immediate financial impact?
Answer: Reduced Effective Gross Income
Higher vacancy directly reduces Effective Gross Income (EGI), which is Gross Potential Rent minus vacancy and credit losses.
What is the primary purpose of a capital reserve fund in apartment portfolio management?
Answer: To fund major repairs and replacements without disrupting operating cash flow
Capital reserves are set aside to cover large, non-recurring expenditures like roof replacements or HVAC systems without impacting operations.
Which budget variance analysis approach compares actual performance against the previous year's actuals rather than current budget?
Answer: Year-over-Year (YoY) Analysis
Year-over-Year analysis benchmarks current performance against the same period in the prior year to identify trends.
In a portfolio of 10 properties, which expense category is most effectively reduced through economies of scale?
Answer: Vendor contracts and supplies purchasing
Bulk purchasing and portfolio-wide vendor contracts leverage economies of scale to reduce per-unit costs for supplies and services.