Assessment task Question 1: Case study Assume: You are a financial adviser and approached by married couple Diane and Leo Alexander. They have limited financial knowledge and are seeking your advice about their current financial status. The following information is an extract of data you gathered as part of fact-finding during an initial client consultation for this couple: . Leo and Diane have returned just before Covid-19 to Melbourne after living in New Zealand for the past 8 years. Both are 35 years old and have a 2-year old son. They have used part of their savings to fund their living expenses whilst looking for work upon their return. Luckily, Leo who is an advanced practice registered nurse found work in a local hospital and Diane has since found part-time work as a teacher. The Alexander couple currently rents an apartment at Elizabeth Street in Melbourne. They intend to buy a house in the future. They are looking into saving money for margin money for a home loan. . . . The couple has informed you of investing part of saving in the managed fund (equities) and Afterpay Ltd Share (ASX: APT) in the name of Leo. They intend to use this as margin money for the purchase of the house. The Alexander couple has informed you that "Savings from their family income will be invested into the Leos Managed Fund (equities) at the end of each financial year. Initially, Diane wanted to invest the savings directly into equities instead of a managed fund. The couple intends to pay back their credit card debt before the financial year ending June 30" 2021. This debt they accrued during their search for a job. The family do not have any private health insurance Assume that both Leo and Diane have minimum employer superannuation contributions paid in addition to their salary and they do not salary sacrifice into their superannuation. Diane and Leo have limited financial knowledge and are seeking your advice about their current financial status. Assets and Liabilities (as of 30th June 2021) Assets (Ownership) Current valuation Liability (Ownership) Current valuation Home Contents (Joint) $20,000 Credit cards (Joint) Includes Car (Leo) $30,000 the annual interest cost $5,000 56,600 Current accounts (Joint) Managed Fund- Equity (Leo) $19,000 Afterpay Ltd Share (Leo) 50,000 Cars loan (5-year term) Superannuation (repayment $520 per month) $20.000 $12.000 $7,000 -Leo -Diane Annual Budget for the yoar ended 30th June 2021 Income type [Inflow Gros Salary Leo Alexander) Gross Salary(Diane Alexander) Managed fund distribution-4.00% tool Amount ($1 101,500 32,700 750 2,400 Plus 51,028 Imputation Credit "Afterpay Ltd - Dividend Leo) Expenses (outflow Rent ($500 per weeld Electricity, Water and Gas Telephone Pay television and the internet Insurance-home and contents Daycare expenses (3 days a week at 548 each day) Insurance -cara Credit Cards repayment (5550 a month for 12 months Car loans repayment (S8000 a year for a 5-year term Petrol and car maintenance Car registration each or total? Public transport Other enperses Food Clothing, harcuts and personal grooming Medical and dental Entertainment Australian Nursing & Midwifery Federation Membership fees Leo) Gifts Birthdays and Christmas 27,010 1312 2.160 744 1200 7.488 2.520 6,600 6,240 6,500 890 2,800 34,500 5,000 2,500 12,000 5615 00 5,000 Required: A Calculate Diane and Leo annual after-tax income for the year ended 30 June 2021. Also, explain how Leo and Diane could reduce their tax nability by splitting their income. Show the effect the strategy would have had they had split income for this current tax yeur. Please provide a brief explanation of splitting of income not more than 100 words) as an effective strategy for the couple. B 1) Calculate the solvency ratio, liquidity ratio and savings ratio using the exander couples financial information, 10 Explain in everyday tarms what these ratio mean, highlight any concerns you have and Suggest one improvement the Alexander couple could make (10 + 10 = 20 marks) Assume: You are a financial adviser and approached by married couple Diane and Leo Alexander. They have limited financial knowledge and are seeking your advice about their current financial status. The following information is an extract of data you gathered as part of fact-finding during an initial client consultation for this couple: . Leo and Diane have returned just before Covid-19 to Melbourne after living in New Zealand for the past 8 years. Both are 35 years old and have a 2-year old son. They have used part of their savings to fund their living expenses whilst looking for work upon their return. Luckily, Leo who is an advanced practice registered nurse found work in a local hospital and Diane has since found part-time work as a teacher. . The Alexander couple currently rents an apartment at Elizabeth Street in Melbourne. They intend to buy a house in the future. They are looking into saving money for margin money for a home loan. . . . The couple has informed you of investing part of saving in the managed fund (equities) and Afterpay Ltd Share (ASX: APT) in the name of Leo. They intend to use this as margin money for the purchase of the house. The Alexander couple has informed you that "Savings from their family income" will be invested into the Leos Managed Fund (equities) at the end of each financial year. Initially, Diane wanted to invest the savings directly into equities instead of a managed fund. The couple intends to pay back their credit card debt before the financial year ending June 30th, 2021. This debt they accrued during their search for a job. The family do not have any private health insurance. Assume that both Leo and Diane have minimum employer superannuation contributions paid in addition to their salary and they do not salary sacrifice into their superannuation, Diane and Leo have limited financial knowledge and are seeking your advice about their current financial status. Assets and Liabilities (as of 30th June 2021) Assets (Ownership Liability (Ownership) Current valuation Home Contents (Joint) $20,000 Credit cards (Joint) Includes Car (Leo) $30,000 the annual interest cost $6,600 Current accounts Joint) Managed Fund-Equity (Leo) $19,000 Afterpay Ltd Share (Leo) 50,000 Cars loan (5.year term) Superannuation (repayment $520 per month) $29,400 $12,000 $7,000 Current valuation $5,000 -Leo -Diane Amount ($) 101,500 Income type (Inflow) Gross Salary-(Leo Alexander) Gross Salary. (Diane Alexander) Managed fund distribution-4.00% (Leo) 32,700 760 "Afterpay Ltd". Dividend (Leo) 2,400 Plus $1,028 Imputation Credit 27,040 1,312 2,160 744 1,200 7,488 2,520 6,600 6,240 Expenses (outflow) Rent ($500 per week) Electricity, Water and Gas Telephone Pay television and the Internet Insurance - home and contents Daycare expenses (3 days a week at $48 each day) Insurance-cars Credit cards repayment ($550 a month for 12 months) Car loans repayment ($8000 a year for a 5-year term) Petrol and car maintenance Car registration each or total? Public transport Other expenses Food Clothing, haircuts and personal grooming Medical and dental Entertainment Australian Nursing & Midwifery Federation Membership fees (Leo) Gifts - Birthdays and Christmas 6,500 890 2,800 14,500 5,000 2,500 12,000 $645.00 5,000 Required: A. Calculate Diane and Leo' annual after-tax income for the year ended 30th June 2021. Also, explain how Leo and Diane could reduce their tax liability by splitting their income. Show the effect this strategy would have had if they had split income for this current tax year. Please provide a brief explanation of splitting of income (not more than 100 words) as an effective strategy for the couple. B. 1) Calculate the solvency ratio, liquidity ratio and savings ratio using the Alexander couple's financial information ii) Explain in everyday terms what these ratios mean, highlight any concerns you have and Suggest one Improvement the Alexander couple could make ili) Assessment task Question 1: Case study Assume: You are a financial adviser and approached by married couple Diane and Leo Alexander. They have limited financial knowledge and are seeking your advice about their current financial status. The following information is an extract of data you gathered as part of fact-finding during an initial client consultation for this couple: . Leo and Diane have returned just before Covid-19 to Melbourne after living in New Zealand for the past 8 years. Both are 35 years old and have a 2-year old son. They have used part of their savings to fund their living expenses whilst looking for work upon their return. Luckily, Leo who is an advanced practice registered nurse found work in a local hospital and Diane has since found part-time work as a teacher. The Alexander couple currently rents an apartment at Elizabeth Street in Melbourne. They intend to buy a house in the future. They are looking into saving money for margin money for a home loan. . . . The couple has informed you of investing part of saving in the managed fund (equities) and Afterpay Ltd Share (ASX: APT) in the name of Leo. They intend to use this as margin money for the purchase of the house. The Alexander couple has informed you that "Savings from their family income will be invested into the Leos Managed Fund (equities) at the end of each financial year. Initially, Diane wanted to invest the savings directly into equities instead of a managed fund. The couple intends to pay back their credit card debt before the financial year ending June 30" 2021. This debt they accrued during their search for a job. The family do not have any private health insurance Assume that both Leo and Diane have minimum employer superannuation contributions paid in addition to their salary and they do not salary sacrifice into their superannuation. Diane and Leo have limited financial knowledge and are seeking your advice about their current financial status. Assets and Liabilities (as of 30th June 2021) Assets (Ownership) Current valuation Liability (Ownership) Current valuation Home Contents (Joint) $20,000 Credit cards (Joint) Includes Car (Leo) $30,000 the annual interest cost $5,000 56,600 Current accounts (Joint) Managed Fund- Equity (Leo) $19,000 Afterpay Ltd Share (Leo) 50,000 Cars loan (5-year term) Superannuation (repayment $520 per month) $20.000 $12.000 $7,000 -Leo -Diane Annual Budget for the yoar ended 30th June 2021 Income type [Inflow Gros Salary Leo Alexander) Gross Salary(Diane Alexander) Managed fund distribution-4.00% tool Amount ($1 101,500 32,700 750 2,400 Plus 51,028 Imputation Credit "Afterpay Ltd - Dividend Leo) Expenses (outflow Rent ($500 per weeld Electricity, Water and Gas Telephone Pay television and the internet Insurance-home and contents Daycare expenses (3 days a week at 548 each day) Insurance -cara Credit Cards repayment (5550 a month for 12 months Car loans repayment (S8000 a year for a 5-year term Petrol and car maintenance Car registration each or total? Public transport Other enperses Food Clothing, harcuts and personal grooming Medical and dental Entertainment Australian Nursing & Midwifery Federation Membership fees Leo) Gifts Birthdays and Christmas 27,010 1312 2.160 744 1200 7.488 2.520 6,600 6,240 6,500 890 2,800 34,500 5,000 2,500 12,000 5615 00 5,000 Required: A Calculate Diane and Leo annual after-tax income for the year ended 30 June 2021. Also, explain how Leo and Diane could reduce their tax nability by splitting their income. Show the effect the strategy would have had they had split income for this current tax yeur. Please provide a brief explanation of splitting of income not more than 100 words) as an effective strategy for the couple. B 1) Calculate the solvency ratio, liquidity ratio and savings ratio using the exander couples financial information, 10 Explain in everyday tarms what these ratio mean, highlight any concerns you have and Suggest one improvement the Alexander couple could make (10 + 10 = 20 marks) Assume: You are a financial adviser and approached by married couple Diane and Leo Alexander. They have limited financial knowledge and are seeking your advice about their current financial status. The following information is an extract of data you gathered as part of fact-finding during an initial client consultation for this couple: . Leo and Diane have returned just before Covid-19 to Melbourne after living in New Zealand for the past 8 years. Both are 35 years old and have a 2-year old son. They have used part of their savings to fund their living expenses whilst looking for work upon their return. Luckily, Leo who is an advanced practice registered nurse found work in a local hospital and Diane has since found part-time work as a teacher. . The Alexander couple currently rents an apartment at Elizabeth Street in Melbourne. They intend to buy a house in the future. They are looking into saving money for margin money for a home loan. . . . The couple has informed you of investing part of saving in the managed fund (equities) and Afterpay Ltd Share (ASX: APT) in the name of Leo. They intend to use this as margin money for the purchase of the house. The Alexander couple has informed you that "Savings from their family income" will be invested into the Leos Managed Fund (equities) at the end of each financial year. Initially, Diane wanted to invest the savings directly into equities instead of a managed fund. The couple intends to pay back their credit card debt before the financial year ending June 30th, 2021. This debt they accrued during their search for a job. The family do not have any private health insurance. Assume that both Leo and Diane have minimum employer superannuation contributions paid in addition to their salary and they do not salary sacrifice into their superannuation, Diane and Leo have limited financial knowledge and are seeking your advice about their current financial status. Assets and Liabilities (as of 30th June 2021) Assets (Ownership Liability (Ownership) Current valuation Home Contents (Joint) $20,000 Credit cards (Joint) Includes Car (Leo) $30,000 the annual interest cost $6,600 Current accounts Joint) Managed Fund-Equity (Leo) $19,000 Afterpay Ltd Share (Leo) 50,000 Cars loan (5.year term) Superannuation (repayment $520 per month) $29,400 $12,000 $7,000 Current valuation $5,000 -Leo -Diane Amount ($) 101,500 Income type (Inflow) Gross Salary-(Leo Alexander) Gross Salary. (Diane Alexander) Managed fund distribution-4.00% (Leo) 32,700 760 "Afterpay Ltd". Dividend (Leo) 2,400 Plus $1,028 Imputation Credit 27,040 1,312 2,160 744 1,200 7,488 2,520 6,600 6,240 Expenses (outflow) Rent ($500 per week) Electricity, Water and Gas Telephone Pay television and the Internet Insurance - home and contents Daycare expenses (3 days a week at $48 each day) Insurance-cars Credit cards repayment ($550 a month for 12 months) Car loans repayment ($8000 a year for a 5-year term) Petrol and car maintenance Car registration each or total? Public transport Other expenses Food Clothing, haircuts and personal grooming Medical and dental Entertainment Australian Nursing & Midwifery Federation Membership fees (Leo) Gifts - Birthdays and Christmas 6,500 890 2,800 14,500 5,000 2,500 12,000 $645.00 5,000 Required: A. Calculate Diane and Leo' annual after-tax income for the year ended 30th June 2021. Also, explain how Leo and Diane could reduce their tax liability by splitting their income. Show the effect this strategy would have had if they had split income for this current tax year. Please provide a brief explanation of splitting of income (not more than 100 words) as an effective strategy for the couple. B. 1) Calculate the solvency ratio, liquidity ratio and savings ratio using the Alexander couple's financial information ii) Explain in everyday terms what these ratios mean, highlight any concerns you have and Suggest one Improvement the Alexander couple could make ili)