Financial Analysis & Reporting Flashcards
7 cards from real CGA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Analysis & Reporting flashcards as text
An appraiser analyzing a mixed-use building must separate residential and commercial income streams. Which financial reporting approach is most appropriate?
Answer: Prepare separate reconstructed statements for each use and aggregate the NOI
Segregating income streams by use allows appropriate expense allocation and enables use-specific capitalization rates to be applied accurately.
Which of the following best describes 'above-line' versus 'below-line' treatment of reserves for replacement?
Answer: Above-line reserves reduce NOI; below-line reserves are excluded from the income approach
When included above the line, reserves reduce NOI (and thus indicated value at a given cap rate); below-line treatment keeps them separate from NOI calculation.
A commercial property's rent roll shows three tenants paying below-market rent with five years remaining on their leases. How should an appraiser address this in the financial analysis?
Answer: Analyze the contract rent period and the reversion to market rent separately
Leased fee valuation requires modeling contract rent through lease expiration, then projecting market rent upon renewal, often using DCF analysis.
An industrial property is owner-occupied. The owner reports no rental income. What is the appraiser's best approach to financial analysis?
Answer: Estimate market rent and construct a hypothetical operating statement
For owner-occupied properties, appraisers impute market rent to construct a hypothetical income statement for income approach analysis.
Which financial analysis concept describes the point at which a property's income exactly covers all operating expenses and debt service?
Answer: Break-Even Ratio (BER)
The Break-Even Ratio identifies the occupancy level at which EGI equals total operating expenses plus debt service, with no surplus cash flow.
In a property financial analysis, 'management expense' should reflect:
Answer: Market-rate management fees regardless of whether the owner self-manages
Appraisers include a market-rate management expense even for self-managed properties because a prospective buyer would incur this cost.
A property's Effective Gross Income increased 5% year-over-year while operating expenses rose 12%. What is the most likely impact on NOI?
Answer: NOI declined as expense growth outpaced income growth
When expenses grow faster than income, the income-expense spread narrows, compressing NOI and potentially the property's value.