3. Using the income and expenditure information for 2021: a. Complete a statement of income and expenses (income statement) for George. Date the statement January through December of 2021 . Next to the dollar amounts for each line item, calculate the percent of Net Income that each line item accounts for (vertical analysis). b. Did George have a cash surplus or a cash deficit in 2021? What impact would the 2021 cash surplus (deficit) have on his net worth (increase net worth, or decrease net worth)? c. Create an Income Statement Pie Chart for George similar to the one in chapter 3 of the textbook. 4. Based on George's financial statements handed out in class, calculate the following ratios: - Emergency Fund ratio - Debt to Total Assets Ratio - Net Worth to Total Assets Ratio - Savings Ratio See your textbook and/or chapter 3 notes for guidance on what to include when calculating the financial ratios. 5. Based on the information in the original case, the financial statements, and the ratios that you calculated: a. List at least 3 positive aspects of George's current financial status. b. List at least 3 negative aspects of George's current financial status. Spring 2021 George Harris is a young single father living in Flagstaff, AZ. He is working as a manager for a mining company. He has been single for 5 years after the death of his wife, Susan. George and Susan had a son, Tom, who lives with George. George fell in love with Flagstaff while attending Northern Arizona University and plans to remain there until retirement. George has also been dating a woman, Beth, for the past three years, and they are beginning to talk about marriage. Recently, a couple of George's friends have had some negative experiences (many lost their jobs because of the downturn in tourism, and another's parent suffered a debilitating stroke), which have caused George to take a closer look at his own financial management. George and Beth have not really discussed their finances, but George is sometimes irritated by the way Beth "pinches pennies." Beth will not buy anything unless it is marked down, and she always shops for the best prices. George does not understand this behavior because he knows she makes more money and has fewer bills than he does. George likes to spend money and he gets pleasure from buying Tom and Beth gifts. George likes to stay in shape by training for triathlons. He travels a few times a year to various cities to compete in triathlon events. Despite a successful career and much to George's chagrin, he has accumulated quite a bit of debt and has had difficulty meeting more than the required monthly payments. This is especially true in regard to the credit card he used to purchase new triathlon training equipment. George has several goals. He feels that he should reduce his debt and establish an adequate emergency fund to be better financially prepared. George also wants to purchase a house since his current apartment is too small. George currently does not save regularly for retirement and he does not know much about investments. The money he has invested has mostly come from employer bonuses. He feels that he has plenty of time to save for retirement and plans to start saving in about five years. He doesn't feel this will make a significant difference in the amount of money he needs to save. Motivated by financial concerns, George attended a financial seminar at his local bank. He received data gathering forms at the seminar and has filled them out as completely as possible. These forms are presented on the following pages. Read the information George has provided so that you can "get acquainted" with him. PERSONAL FINANCIAL INFORMATION LOCATION OF DOCUMENTS RETIREMENT INFORMATION ASSETS - October 1, 2022 CASH ON HAND SECURITY INVESTMENTS AUTOMOBILE(S) LIABILITIES Credit Cards - As of October 1, 2022 2021 INCOME Gross Income George's Salary Cash gifts Interest $147,000 1,200 (non-recurring) 650 76 349 Capital gains distributions Sale of Securities: Fidelity Magellan Fund (FMAGX) $9,129 (non-recurring) nary INSURANCE INFORMATION RFNTFR'S TNOITD ANFE LIFE INSI IR ANCE ESTATE PLANNING INFORMATION George would like to leave all of his assets to Tom and leave him debt free in case of death. George would like his half-brother, Joe Harris, to be Tom's legal guardian. Other than an up-todate will, George has no formal estate plan. FINANCIAL GOALS Short Range ( 1 Year) Pay off MasterCard and Capital One Card Reduce discretionary spending Purchase house Intermediate Range (1-5 Years) Establish an emergency fund Begin a college savings plan for Tom Long Term (over 5 years) Start saving more aggressively for retirement Travel What is your single most important financial objective at this time? To reduce discretional spending OTHER INFORMATION 1. Are you able to save regularly? My contribution to my employer's 401(k) plan is the only regular savings. 2. Do you invest regularly? I have dabbled in some investing but it's not regular. Usually, I try to invest bonuses or other windfalls received. 3. Do you feel you are financially organized? Not really. 4. Do you budget your money? No, I often overspend. 5. If you were to die, could your spouse handle the finances? N/A, but I believe Beth could handle the finances if we do get married. 6. How do you feel about saving for retirement? It is very important. 7. If you had an extra $5,000 what would you do with it? Take a vacation with Tom. 8. How do you feel about taking investment risks? Aggrossive risk taker 9. How is your health? Very good. 3. Using the income and expenditure information for 2021: a. Complete a statement of income and expenses (income statement) for George. Date the statement January through December of 2021. Next to the dollar amounts for each line item, calculate the percent of Net Income that each line item accounts for (vertical analysis). b. Did George have a cash surplus or a cash deficit in 2021? What impact would the 2021 cash surplus (deficit) have on his net worth (increase net worth, or decrease net worth)? c. Create an Income Statement Pie Chart for George similar to the one in chapter 3 of the textbook. 4. Based on George's financial statements handed out in class, calculate the following ratios: - Emergency Fund ratio - Debt to Total Assets Ratio - Net Worth to Total Assets Ratio - Savings Ratio See your textbook and/or chapter 3 notes for guidance on what to include when calculating the financial ratios. 5. Based on the information in the original case, the financial statements, and the ratios that you calculated: a. List at least 3 positive aspects of George's current financial status. b. List at least 3 negative aspects of George's current financial status. 3. Using the income and expenditure information for 2021: a. Complete a statement of income and expenses (income statement) for George. Date the statement January through December of 2021 . Next to the dollar amounts for each line item, calculate the percent of Net Income that each line item accounts for (vertical analysis). b. Did George have a cash surplus or a cash deficit in 2021? What impact would the 2021 cash surplus (deficit) have on his net worth (increase net worth, or decrease net worth)? c. Create an Income Statement Pie Chart for George similar to the one in chapter 3 of the textbook. 4. Based on George's financial statements handed out in class, calculate the following ratios: - Emergency Fund ratio - Debt to Total Assets Ratio - Net Worth to Total Assets Ratio - Savings Ratio See your textbook and/or chapter 3 notes for guidance on what to include when calculating the financial ratios. 5. Based on the information in the original case, the financial statements, and the ratios that you calculated: a. List at least 3 positive aspects of George's current financial status. b. List at least 3 negative aspects of George's current financial status. Spring 2021 George Harris is a young single father living in Flagstaff, AZ. He is working as a manager for a mining company. He has been single for 5 years after the death of his wife, Susan. George and Susan had a son, Tom, who lives with George. George fell in love with Flagstaff while attending Northern Arizona University and plans to remain there until retirement. George has also been dating a woman, Beth, for the past three years, and they are beginning to talk about marriage. Recently, a couple of George's friends have had some negative experiences (many lost their jobs because of the downturn in tourism, and another's parent suffered a debilitating stroke), which have caused George to take a closer look at his own financial management. George and Beth have not really discussed their finances, but George is sometimes irritated by the way Beth "pinches pennies." Beth will not buy anything unless it is marked down, and she always shops for the best prices. George does not understand this behavior because he knows she makes more money and has fewer bills than he does. George likes to spend money and he gets pleasure from buying Tom and Beth gifts. George likes to stay in shape by training for triathlons. He travels a few times a year to various cities to compete in triathlon events. Despite a successful career and much to George's chagrin, he has accumulated quite a bit of debt and has had difficulty meeting more than the required monthly payments. This is especially true in regard to the credit card he used to purchase new triathlon training equipment. George has several goals. He feels that he should reduce his debt and establish an adequate emergency fund to be better financially prepared. George also wants to purchase a house since his current apartment is too small. George currently does not save regularly for retirement and he does not know much about investments. The money he has invested has mostly come from employer bonuses. He feels that he has plenty of time to save for retirement and plans to start saving in about five years. He doesn't feel this will make a significant difference in the amount of money he needs to save. Motivated by financial concerns, George attended a financial seminar at his local bank. He received data gathering forms at the seminar and has filled them out as completely as possible. These forms are presented on the following pages. Read the information George has provided so that you can "get acquainted" with him. PERSONAL FINANCIAL INFORMATION LOCATION OF DOCUMENTS RETIREMENT INFORMATION ASSETS - October 1, 2022 CASH ON HAND SECURITY INVESTMENTS AUTOMOBILE(S) LIABILITIES Credit Cards - As of October 1, 2022 2021 INCOME Gross Income George's Salary Cash gifts Interest $147,000 1,200 (non-recurring) 650 76 349 Capital gains distributions Sale of Securities: Fidelity Magellan Fund (FMAGX) $9,129 (non-recurring) nary INSURANCE INFORMATION RFNTFR'S TNOITD ANFE LIFE INSI IR ANCE ESTATE PLANNING INFORMATION George would like to leave all of his assets to Tom and leave him debt free in case of death. George would like his half-brother, Joe Harris, to be Tom's legal guardian. Other than an up-todate will, George has no formal estate plan. FINANCIAL GOALS Short Range ( 1 Year) Pay off MasterCard and Capital One Card Reduce discretionary spending Purchase house Intermediate Range (1-5 Years) Establish an emergency fund Begin a college savings plan for Tom Long Term (over 5 years) Start saving more aggressively for retirement Travel What is your single most important financial objective at this time? To reduce discretional spending OTHER INFORMATION 1. Are you able to save regularly? My contribution to my employer's 401(k) plan is the only regular savings. 2. Do you invest regularly? I have dabbled in some investing but it's not regular. Usually, I try to invest bonuses or other windfalls received. 3. Do you feel you are financially organized? Not really. 4. Do you budget your money? No, I often overspend. 5. If you were to die, could your spouse handle the finances? N/A, but I believe Beth could handle the finances if we do get married. 6. How do you feel about saving for retirement? It is very important. 7. If you had an extra $5,000 what would you do with it? Take a vacation with Tom. 8. How do you feel about taking investment risks? Aggrossive risk taker 9. How is your health? Very good. 3. Using the income and expenditure information for 2021: a. Complete a statement of income and expenses (income statement) for George. Date the statement January through December of 2021. Next to the dollar amounts for each line item, calculate the percent of Net Income that each line item accounts for (vertical analysis). b. Did George have a cash surplus or a cash deficit in 2021? What impact would the 2021 cash surplus (deficit) have on his net worth (increase net worth, or decrease net worth)? c. Create an Income Statement Pie Chart for George similar to the one in chapter 3 of the textbook. 4. Based on George's financial statements handed out in class, calculate the following ratios: - Emergency Fund ratio - Debt to Total Assets Ratio - Net Worth to Total Assets Ratio - Savings Ratio See your textbook and/or chapter 3 notes for guidance on what to include when calculating the financial ratios. 5. Based on the information in the original case, the financial statements, and the ratios that you calculated: a. List at least 3 positive aspects of George's current financial status. b. List at least 3 negative aspects of George's current financial status