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
What does a fleet's 'cost per mile' metric fail to capture that 'cost per unit of work' would better reflect?
Answer: Productivity and mission effectiveness of each vehicle
Cost per unit of work ties fleet expense to actual output (deliveries, service calls), revealing productivity differences that mileage alone cannot show.
Which of the following is an example of a capital expenditure (CapEx) in fleet management?
Answer: Purchasing a new service vehicle outright
Purchasing a vehicle outright is a capital expenditure because it acquires a long-term asset that is depreciated over its useful life.
A fleet manager wants to justify adding one maintenance technician. Which financial document would best support this request?
Answer: Cost-benefit analysis comparing technician salary to outsourced repair costs
A cost-benefit analysis quantifies the financial return of adding in-house staff versus continuing to outsource, providing the justification leadership needs.
Which term describes the interest rate that makes the net present value of all cash flows from a fleet investment equal to zero?
Answer: Internal Rate of Return (IRR)
The Internal Rate of Return (IRR) is the break-even discount rate at which an investment's NPV equals zero, used to compare investment attractiveness.
A zero-based budget approach in fleet management requires managers to:
Answer: Justify every expense from scratch each budget cycle
Zero-based budgeting requires all expenses to be justified anew each period rather than using prior-year spending as a baseline.
In fleet leasing, what does the 'money factor' represent?
Answer: The effective interest rate used to calculate the finance charge on a lease
The money factor is the finance charge component of a lease payment and can be converted to an approximate APR by multiplying by 2,400.
Which cost is most likely to be categorized as a fixed fleet cost regardless of vehicle utilization?
Answer: Comprehensive and collision insurance premiums
Insurance premiums are fixed costs because they are charged per vehicle per period regardless of how many miles the vehicle is driven.