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
Under USPAP, when an appraiser uses client-provided financial data in a real property report, the appraiser must:
Answer: Disclose reliance on the data and note any steps taken to verify or reconcile it
USPAP requires disclosure of information sources and any extraordinary assumptions made when client-provided data cannot be fully verified.
An appraiser is completing a financial analysis for a hotel property. Which income measure is most closely analogous to NOI in hotel reporting?
Answer: Net Operating Income after management fees and before debt service
NOI in hotel appraisal is calculated after all operating expenses and management fees, but before debt service and capital reserves, consistent with standard income approach methodology.
Which approach to estimating vacancy and collection loss is most defensible in a financial analysis report?
Answer: Market-derived rates based on comparable property surveys and historical absorption data
Supportable vacancy estimates must be grounded in comparable market data and local absorption trends, not owner projections or arbitrary standards.
An appraiser is reconciling direct capitalization and DCF value conclusions that differ by 8%. The most appropriate action is to:
Answer: Analyze the source of the discrepancy and weight each method based on data quality and applicability
Reconciliation requires the appraiser to understand why values differ and assign weight based on data reliability and the method's appropriateness for the assignment.
A property with a $2,000,000 value and $1,200,000 mortgage has annual debt service of $96,000 and pre-tax equity cash flow of $24,000. What is the equity dividend rate?
Answer: 3.0%
Equity Dividend Rate = Equity Cash Flow ÷ Equity Investment = $24,000 ÷ $800,000 = 3.0%.
When analyzing a triple-net-leased property, which expense items would typically appear in the landlord's reconstructed operating statement?
Answer: Structural reserves, ground lease payments, and management fees
In a true NNN lease, tenants pay taxes, insurance, and maintenance; the landlord retains responsibility for structural items, management, and any ground lease obligations.
Which financial analysis error would most significantly overstate a property's value in the income approach?
Answer: Omitting reserves for replacement from operating expenses
Excluding reserves for replacement understates total operating expenses, inflates NOI, and therefore overstates the capitalized value of the property.