Venue Financial Management Flashcards

A venue's accounts receivable days outstanding increases from 25 to 45 days. This change most likely indicates:

Answer: Slower collection of invoices

A higher days-outstanding figure means the venue is taking longer to collect payments, which can strain cash flow.

What is the purpose of a capital expenditure (CapEx) budget for a venue?

Answer: To plan major asset purchases and long-term investments

A CapEx budget plans for significant purchases like equipment, renovations, or technology that provide long-term value beyond a single accounting period.

Which financial ratio measures a venue's ability to pay short-term obligations with its most liquid assets?

Answer: Quick ratio

The quick ratio (cash + receivables ÷ current liabilities) measures liquidity using only the most liquid assets, excluding inventory.

A venue generates $1.2M in annual revenue and has $180,000 in net profit. What is the net profit margin?

Answer: 15%

Net profit margin = Net profit ÷ Revenue = $180,000 ÷ $1,200,000 = 15%.

In venue contract negotiations, a 'minimum guarantee' clause primarily protects:

Answer: The venue from event cancellations

A minimum guarantee ensures the venue receives a baseline revenue payment regardless of actual event attendance or consumption.

Which internal control best prevents duplicate payments to vendors in a venue's accounts payable process?

Answer: Three-way matching of purchase order, receiving report, and invoice

Three-way matching verifies that the purchase order, delivery receipt, and vendor invoice all agree before payment is authorized, preventing duplicates and errors.

A venue manager reviews an unfavorable budget variance for utilities. The FIRST step in addressing this variance is to:

Answer: Investigate the root cause of the overage

Before taking corrective action, a manager must identify whether the variance stems from higher-than-expected usage, rate increases, or a billing error.