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

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Prepare for the CAPS Exam with a comprehensive study of Module 2. Utilize our practice resources filled with flashcards, multiple choice questions, and thorough explanations to ensure your success!

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Which of the following best describes cash flow?

  1. Total income received from the property

  2. Income minus expenses, before any deductions

  3. The net profit after all costs

  4. The overall income from investments only

The correct answer is: Income minus expenses, before any deductions

Cash flow is best described as the income generated by a property after subtracting its operating expenses but before any deductions such as taxes, interest, or depreciation. This concept essentially reflects the actual funds available for distribution or reinvestment. While total income, net profit after all costs, or overall income from investments might provide some insight into a property's financial performance, they do not capture the immediate liquidity produced by that property. The income minus expenses, before additional deductions, gives a clear picture of how much cash is generated from the day-to-day operations of the property, allowing property managers and owners to understand their operational efficiency and make informed financial decisions. This makes it a crucial metric in property management and investment analysis.

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