Cash Flow Analysis Flashcards
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Read the first 7 Cash Flow Analysis flashcards as text
In Argus Enterprise, which cash flow line item represents the difference between Potential Gross Revenue and Effective Gross Revenue?
Answer: Vacancy & Credit Loss
Vacancy & Credit Loss is subtracted from Potential Gross Revenue to arrive at Effective Gross Revenue, accounting for unleased space and uncollected rents.
When analyzing a multi-tenant office property in Argus, 'Recovery Income' on the cash flow report typically refers to:
Answer: Tenant reimbursements for operating expenses
Recovery Income represents tenant reimbursements for operating expenses such as CAM, insurance, and taxes under gross-up or NNN lease structures.
A retail property cash flow model shows 'Percentage Rent' as a separate line. This income is triggered when:
Answer: Tenant sales exceed a specified natural breakpoint
Percentage rent kicks in once tenant sales surpass the natural breakpoint, calculated as base rent divided by the percentage rent rate.
In Argus, the 'Gross-Up' feature for operating expense recoveries is used to:
Answer: Normalize expenses to a fully occupied level for proration purposes
Gross-up normalizes variable operating expenses to a 100% occupancy basis so each tenant pays a fair pro-rata share regardless of actual occupancy.
Which of the following best describes 'Above-Grade Cash Flow' in the context of a leveraged Argus model?
Answer: Cash flow after debt service but before taxes
Above-Grade Cash Flow (also called Cash Flow Before Tax or Equity Cash Flow) is the income remaining after all operating expenses and debt service obligations are paid.
A property's Argus cash flow shows a negative cash flow in Year 1 despite positive NOI. The most likely cause is:
Answer: Debt service exceeding NOI
When debt service obligations exceed NOI, the leveraged cash flow turns negative even though the property itself operates profitably.
In Argus Enterprise, 'Other Income' line items such as parking and antenna revenue are modeled using which input method?
Answer: Non-rent revenue inputs with independent growth rates
Non-rent income sources like parking and antenna fees are entered as separate revenue line items with their own amounts and growth rate assumptions independent of lease schedules.