MCQS AND SOLUTIONS ON VALUATION OF SPECIAL PROPERTIES IN INDIA: HOTELS/ CINEMAS/ MALLS/ PETROL PUMPS/ AND HILL RESORTS USING THE PROFIT METHOD

In hotel valuation, which of the following is a direct cost?

A. Administrative salaries
B. Housekeeping supplies
C. Marketing expenses
D. Property taxes
Answer: B. Housekeeping supplies

What is RevPAR in hotel industry valuation?

A. Revenue Per Available Room
B. Return Per Available Room
C. Rate Per Average Room
D. Revenue Per Average Room
Answer: A. Revenue Per Available Room

Which type of income is crucial for valuing a hotel?

A. Ancillary income
B. Rental income
C. Dividend income
D. Interest income
Answer: A. Ancillary income

In hotel valuation, ADR stands for:

A. Average Discount Rate
B. Annual Depreciation Rate
C. Average Daily Rate
D. Annual Daily Revenue
Answer: C. Average Daily Rate

Which of the following is considered a fixed cost in hotel operations?

A. Laundry expenses
B. Room service supplies
C. Staff salaries
D. Utility costs
Answer: C. Staff salaries

For a hotel, the break-even occupancy rate is crucial to determine:

A. Profit margin
B. Room pricing strategy
C. Minimum occupancy to cover costs
D. Marketing budget
Answer: C. Minimum occupancy to cover costs

Which financial metric is important for evaluating the profitability of a hotel?

A. Gross margin
B. Operating margin
C. Net profit margin
D. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
Answer: D. EBITDA

In hotel valuation, which occupancy metric is used to assess performance?

A. Occupancy rate
B. Turnover rate
C. Capacity utilization
D. Room usage ratio
Answer: A. Occupancy rate

Which of the following is typically included in the hotel’s ancillary income?

A. Room rent
B. Restaurant revenue
C. Conference hall rental
D. Laundry services
Answer: D. Laundry services

Which cost is often variable in the hotel industry?

A. Insurance costs
B. Depreciation
C. Utility expenses
D. Loan interest
Answer: C. Utility expenses

In the profit method for valuing a cinema, which of the following is a primary revenue source?

A. Concession sales
B. Advertising revenue
C. Ticket sales
D. Merchandise sales
Answer: C. Ticket sales

Which cost is considered when calculating the profitability of a cinema?

A. Film rental costs
B. Construction costs
C. Security expenses
D. Landscaping costs
Answer: A. Film rental costs

In cinema valuation, the term ‘box office revenue’ refers to:

A. Concession stand income
B. Merchandise sales
C. Revenue from ticket sales
D. Advertising revenue
Answer: C. Revenue from ticket sales

Which of the following is an ancillary income source for cinemas?

A. Ticket sales
B. Film distribution fees
C. Concession stand sales
D. Maintenance fees
Answer: C. Concession stand sales

What is the primary expense in operating a cinema?

A. Marketing costs
B. Film acquisition costs
C. Staff salaries
D. Utility expenses
Answer: B. Film acquisition costs

For a cinema, what does the occupancy rate measure?

A. Number of tickets sold
B. Number of seats filled per show
C. Revenue per screen
D. Total annual attendance
Answer: B. Number of seats filled per show

Which metric is crucial for evaluating a cinema’s financial performance?

A. Gross margin
B. Net profit margin
C. Operating margin
D. EBITDA
Answer: D. EBITDA

In the profit method, which cost is typically fixed for a cinema?

A. Film rental costs
B. Staff wages
C. Concession supplies
D. Marketing expenses
Answer: B. Staff wages

For a cinema, which income type is considered variable?

A. Ticket sales
B. Advertising income
C. Rental income
D. Sponsorship income
Answer: A. Ticket sales

What is a common method for increasing revenue in cinemas?

A. Lowering ticket prices
B. Increasing concession prices
C. Reducing film rental costs
D. Expanding seating capacity
Answer: B. Increasing concession prices

What is a major source of income for malls?

A. Advertising revenue
B. Parking fees
C. Rental income from retailers
D. Event hosting fees
Answer: C. Rental income from retailers

Which type of expense is significant for the operation of a mall?

A. Depreciation
B. Marketing expenses
C. Utility costs
D. Insurance costs
Answer: C. Utility costs

In mall valuation, ‘footfall’ refers to:

A. Number of stores in the mall
B. Total rental income
C. Number of visitors to the mall
D. Parking capacity
Answer: C. Number of visitors to the mall

Which of the following is an ancillary revenue source for malls?

A. Rental income
B. Advertising space rental
C. Security fees
D. Property taxes
Answer: B. Advertising space rental

What is typically a fixed cost in mall operations?

A. Security expenses
B. Utility costs
C. Staff salaries
D. Maintenance expenses
Answer: C. Staff salaries

Which of the following is a key performance indicator for malls?

A. Occupancy rate
B. Sales per square foot
C. Advertising revenue
D. Number of parking spaces
Answer: B. Sales per square foot

In the profit method for mall valuation, what is a significant variable cost?

A. Property taxes
B. Staff wages
C. Marketing expenses
D. Utility costs
Answer: D. Utility costs

Which metric is essential to assess a mall’s profitability?

A. Gross margin
B. Net profit margin
C. Operating margin
D. EBITDA
Answer: D. EBITDA

For malls, the term ‘CAM’ expenses refer to:

A. Common Area Maintenance expenses
B. Capital Asset Management expenses
C. Customer Acquisition and Marketing expenses
D. Corporate Administration and Management expenses
Answer: A. Common Area Maintenance expenses

Which of the following typically affects a mall’s revenue the most?

A. Number of anchor tenants
B. Distance from the city center
C. Design and layout
D. Number of parking spaces
Answer: A. Number of anchor tenants

In the profit method for valuing a petrol pump, which of the following is a primary revenue source?

A. Fuel sales
B. Car wash services
C. Convenience store sales
D. Advertising billboards
Answer: A. Fuel sales

Which cost is crucial for the profitability of a petrol pump?

A. Marketing expenses
B. Fuel purchase costs
C. Staff salaries
D. Maintenance expenses
Answer: B. Fuel purchase costs

What is a significant ancillary income source for petrol pumps?

A. Fuel sales
B. Lubricant sales
C. Car repair services
D. Convenience store sales
Answer: D. Convenience store sales

Which of the following costs is typically fixed for a petrol pump?

A. Fuel purchase costs
B. Staff wages
C. Utility costs
D. Marketing expenses
Answer: B. Staff wages

In petrol pump valuation, what does ‘throughput’ refer to?

A. Number of vehicles served per day
B. Volume of fuel sold
C. Revenue generated per liter of fuel
D. Total sales from all sources
Answer: B. Volume of fuel sold

Which metric is important for evaluating the performance of a petrol pump?

A. Gross margin
B. Net profit margin
C. Operating margin
D. EBITDA
Answer: D. EBITDA

In the profit method, which cost is usually variable for a petrol pump?

A. Property taxes
B. Insurance costs
C. Fuel purchase costs
D. Staff salaries
Answer: C. Fuel purchase costs

Which of the following is a key indicator of a petrol pump’s profitability?

A. Number of customers
B. Volume of fuel sold
C. Number of staff
D. Marketing expenses
Answer: B. Volume of fuel sold

For petrol pumps, what does the term ‘gross margin per liter’ refer to?

A. Total sales revenue
B. Profit margin on fuel sales
C. Operating expenses per liter
D. Net income per liter sold
Answer: B. Profit margin on fuel sales

Which factor is most likely to affect the revenue of a petrol pump?

A. Location
B. Branding
C. Service quality
D. Size of the convenience store
Answer: A. Location

Which of the following is a primary revenue source for hill resorts?

A. Conference hall rental
B. Room tariffs
C. Spa services
D. Restaurant sales
Answer: B. Room tariffs

What is a significant cost for the operation of a hill resort?

A. Landscaping expenses
B. Staff salaries
C. Utility costs
D. Marketing expenses
Answer: B. Staff salaries

Which of the following is an ancillary income source for hill resorts?

A. Room rent
B. Event hosting
C. Food and beverage sales
D. Transportation services
Answer: D. Transportation services

In hill resort valuation, what does ‘occupancy rate’ refer to?

A. Number of guests per room
B. Percentage of rooms booked
C. Total number of guests
D. Seasonal variation in guests
Answer: B. Percentage of rooms booked

Which type of cost is typically fixed for hill resorts?

A. Utility expenses
B. Room maintenance costs
C. Staff wages
D. Marketing expenses
Answer: C. Staff wages

What is a key performance indicator for hill resorts?

A. Average length of stay
B. Number of rooms
C. Seasonal occupancy rates
D. Total revenue
Answer: C. Seasonal occupancy rates

Which of the following costs is usually variable for a hill resort?

A. Property taxes
B. Insurance costs
C. Food and beverage costs
D. Staff salaries
Answer: C. Food and beverage costs

In the profit method, which metric is crucial for evaluating hill resort performance?

A. Gross margin
B. Net profit margin
C. Operating margin
D. EBITDA
Answer: D. EBITDA

Which factor is most likely to impact the revenue of a hill resort?

A. Location
B. Number of staff
C. Size of the property
D. Quality of amenities
Answer: D. Quality of amenities

Which of the following is a common strategy for increasing revenue in hill resorts?

A. Increasing room tariffs
B. Reducing staff wages
C. Expanding parking facilities
D. Adding more rooms
Answer: A. Increasing room tariffs