Odie manages several rental properties for real estate investors

M15 ♦ VERTICAL ANALYSIS

Odie manages several rental properties for real estate investors. Each month, he reviews the cash flow statements from each property to look for trouble spots. Information for one of the properties, Eastwick Apartments, is as follows for June of the current year:
Eastwick Apartments Statement of Cash Receipts and Expenses
Revenue:
Rental revenue        $600,000
Vending machine revenue        7,500
Total revenue        $607,500
Expenses:
Advertising expense    $ 8,000
Administrative expense    44,100
Utilities expense    60,000
Maintenance expense    54,500
Repair expense    30,000
Real estate tax expense    88,200
Insurance expense    6,000
Interest expense    124,000
Total expenses        414,800
Net cash flow        $192,700
Odie has asked you to develop a worksheet that will automatically prepare a vertical analysis of the cash flow data (file name VERT). All percentages should be based on total revenue. Use the data provided as input for your model.
Review the Model-Building Problem Checklist on page 154 to ensure that your worksheet is complete. Print the worksheet when done. Check figure: Interest expense is 20% of total revenue. To test your model, use the following information for Westwick Apartments for June.
Westwick Apartments Statement of Cash Receipts and Expenses
Revenue:
Rental revenue        $135,000
Vending machine revenue        9,930
Total revenue        $144,930
Expenses:
Advertising expense    $ 3,330
Administrative expense    5,075
Utilities expense    8,475
Maintenance expense    3,375
Repair expense    15,600
Real estate tax expense    12,000
Insurance expense    3,330
Interest expense    30,000
Total expenses        81,185
Net cash flow        $ 63,745
Print the worksheet when done. Check figure: Interest expense is 21% of total revenue.

Here’s the SOLUTION

This entry was posted in Homework Help. Bookmark the permalink.

Comments are closed.