Airport Operating Finance & Budget Preparation

Question 1

What are the 3 Financial Ratios?

Answer 1

Leverage - ability to pay its obligations
Effectiveness- effective way to utilize its assets
Profitable - success in generating profit

Question 2

What is “break-even”?

Answer 2

The annual cost for providing, operating, maintaining, and administering an airport facility

Question 3

What are the 4 budget cycles?

Answer 3

1) budget preparation by executive agency (Airport exec, city manager, etc.)
2) budget is submitted to the legislative body (i.e. Commission, board, airline MII, etc.) for approval
3) execution/expenditure
4) audit

Question 4

What are the budgeting techniques?

Answer 4

1) Line-item - divided into specific purposes; least flexibility for Airport Exec
2) Performance Based Budget - what it’s trying to accomplish, how much it’s planning and what resources
3) Program Budgeting - divides expenditures by activities
4) Zero-based budgeting - starts from zero base

Question 5

What is a variance report?

Answer 5

Budget tracking tool

Question 6

Program Budgeting is…

Answer 6

Divides expenditures by activities

Most potential for policy makers to review the implications of spending

Question 7

Zero bases budgeting is…

Answer 7

Associating service levels in each program with cost and prioritizing all options

Question 8

Performance based budget is…

Answer 8

What each administrative unit is trying to accomplish

Question 9

Line item budget is…

Answer 9

List each Dept and assigns money

Least amount of flexibility

Question 10

When is an airport required to report finances to FAA?

Answer 10

Commercial airports enplaning 2500 or more file form of Financial Governmental Payment Report and Operating Financial Summary