Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 2

What is the primary financial report used to assess a property's financial position?

1. Balance Sheet

2. Cash Flow Statement

3. Operating Statement

4. Accounts Receivable Report

The correct answer is: Operating Statement

The operating statement is the primary financial report used to assess a property's financial position because it provides a detailed view of the property's income and expenses over a specific period. This report showcases how effectively the property is generating revenue through rents and other sources while also outlining the costs associated with its operation, such as maintenance, utilities, and management fees. By analyzing the operating statement, property managers and investors can evaluate the operational efficiency and profitability of the property, identify trends in financial performance, and make informed decisions regarding budgeting and future investments. While the balance sheet offers a snapshot of the property's assets, liabilities, and equity at a specific point in time, it does not detail how well the property is performing operationally. Similarly, the cash flow statement provides insight into cash inflows and outflows, but it does not provide a comprehensive view of operational revenues and expenses in the same way that the operating statement does. The accounts receivable report focuses specifically on amounts owed from tenants and does not give a full picture of the property’s financial performance. Therefore, the operating statement is essential for evaluating the overall financial health of a property.