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Ratio Analyses
Use the following balance sheet and cash flow statement information to answer the questions below.
Liquid assets: $16,000;
home value: $190,000;
monthly mortgage payment: $1,250;
investment assets: $100,000;
personal property: $20,000;
total assets: $326,000;
short-term debt: $5,400 ($450 a month);
long-term debt: $170,000 ($2,200 a month);
total debt: $175,400;
monthly gross income: $13,000;
monthly disposable income: $6,000;
monthly expenses: $7,000.
Calculate the ratios below. Round your answers to two decimal places.

Respuesta :

jepessoa

Answer:

Since the requirements were missing, I looked for similar questions:

(a) Liquidity ratio  for individuals

basic liquidity ratio = cash (liquid) assets / monthly expenses = $16,000 / $7,000 = 2.29

Depending on the maturity of the investment assets, the liquidity ratio could increase, but since the information is limited, we can only consider liquid assets. E.g. if the investment assets include bonds that mature in a very short term they should be included in this formula, but if they include bonds that mature in x number of years, then they aren't included.

(b) Debt-to-asset ratio :

generally the formula is debt to asset ratio = $175,400 / $326,000 = 0.54

 

(c) Debt service-to-income ratio

debt service to income ratio = monthly payments / gross income = ($450 + $2,200) / $13,000 = $2,650 / $13,000 = 0.20

(d) Debt payments-to-disposable income ratio

debt payments to disposable income ratio = monthly payments / disposable income = ($450 + $2,400) / $6,000 = $2,650 / $6,000 = 0.44

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