READINGS

Question 1

Why is cash flow management important for a business?

Answer 1

It may determine whether you stay in business over time and how solvent your property is.

Question 2

When must cash be available to pay bills?

Answer 2

When they are due, not at some future time.

Question 3

What does the process of preparing a cash-flow budget allow a real estate manager to do?

Answer 3

Plan for the future and monitor the uses of cash.

Question 4

What does a cash-flow budget determine?

Answer 4

How much actual cash will be generated and how much will be needed for operations and debt service.

Question 5

Can a property have a positive cash position at year-end while experiencing negative cash flow during the year?

Answer 5

Yes, there may be periods during the year when the position is negative.

Question 6

What can forecasts of cash flow be used for?

Answer 6

Evaluating the viability of a project.

Question 7

In real estate, what does the term ‘cash flow’ often refer to?

Answer 7

The bottom line of the budget, where a dollar figure is given as a measure of profitability.

Question 8

How does the real estate definition of cash flow contrast with its everyday meaning?

Answer 8

It contrasts with daily transactions that are paid in cash.

Question 9

Fill in the blank: Cash must be available to pay bills when they are _______.

Answer 9

[due]

Question 10

True or False: A cash-flow budget is only necessary at the end of the fiscal year.

Answer 10

False

Question 11

What is the primary purpose of monitoring cash uses in a cash-flow budget?

Answer 11

To ensure sufficient cash is available for future operations.