Financial Management Flashcards
7 cards from real CAFM 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 Management flashcards as text
Which depreciation method results in the highest book value at the end of an asset's useful life if the asset has a residual value?
Answer: Straight-line depreciation
Straight-line depreciation spreads cost evenly and stops at residual value, preserving the highest book value compared to accelerated methods.
A fleet manager is evaluating two vehicles: Vehicle A has a 5-year TCO of $85,000 and Vehicle B has a 5-year TCO of $78,000. What additional factor should be considered before making a final decision?
Answer: Residual value and remarketing potential at end of cycle
Residual value directly affects the net cost of ownership and must be factored into TCO comparisons to identify the true least-cost option.
What is the primary purpose of a fleet charge-back system?
Answer: To allocate vehicle operating costs to the departments that use them
A charge-back system allocates fleet costs to user departments, promoting cost accountability and accurate departmental budgeting.
When calculating a vehicle's break-even mileage for replacement, which cost relationship is being analyzed?
Answer: Fixed costs versus variable costs
Break-even mileage analysis compares fixed ownership costs against variable operating costs to determine the optimal replacement point.
A fleet department receives a budget variance report showing a 15% unfavorable fuel variance. What is the most appropriate first step?
Answer: Analyze the cause by reviewing fuel consumption data, pricing changes, and mileage
Root cause analysis of fuel variance data is required before taking corrective action to determine whether the issue is price-driven, consumption-driven, or mileage-driven.
Which financial metric best measures how efficiently a fleet asset generates revenue relative to its total cost?
Answer: Return on Investment (ROI)
ROI measures the financial return generated by the fleet asset relative to its total cost, indicating how efficiently capital is deployed.
Under a full-service lease arrangement, who typically bears responsibility for vehicle maintenance costs?
Answer: The lessor/leasing company
In a full-service lease, the lessor bundles maintenance, repairs, and other services into the lease payment, assuming those cost responsibilities.