eBook Do the Math 3-1 Ratio Analyses for Victor and Maria Review the financial statements of Victor and Maria Hernandez and the financial ratios provided below. Percent 0.3 1.1 0.7 0.8 0.2 0.2 3.2% Balance Sheet for a couple with Two Children- Victor and Maria Hernandez, January 1, 2018 Dollars ASSETS Monetary Assets Cash on hand 1,200 Savings account 4,200 Victor's checking account 2,700 Maria's checking account 3,300 Tax refund due 700 Rent receivable 650 Total Monetary Assets $ 12,750 Tangible Assets Home 192,000 Personal property 9,000 Automobiles 9,500 Total Tangible Assets $ 210,500 Investment Assets Fidelity mutual funds 4,000 Scudder mutual fund 5,000 Ford Motor Company stock 2,500 New York 2038 bonds 3,800 Life insurance cash value 5,400 IRA accounts 34,400 Real estate investment 115,000 Total Investment Assets $170,100 Total Assets $393,350 LIABILITIES Short-Term liabilities Dentist bill due 220 Credit card debt 1,600 Total Short-Term Liabilities $ 1,820 Long-Term liabilities Vehicle loan 6,900 Home mortgage loan 91.900 48.8 2.3 2.4 5315% 1.0 1.3 0.6 1.0 1.4 8.7 29.2 43.2% 100% 0.1 0.4 0.5% 1.8 23.4 TOUS, and Budgets $ 1,820 0.5% Total Short-Term Liabilities Long-Term liabilities Vehicle loan Home mortgage loan Total Long-Term Liabilities Total Liabilities Net Worth Total Liabilities and Net Worth 6,900 91,900 $ 98,800 $100,620 $292,730 $393,350 1.8 23.4 25.1% 25.6% 74.4% 100.0% Cash Flow Statement for a couple with Two Children- Victor and Maria Hernandez, January 1, 2018 - December 31, 2018 Dollars Percent INCOME Victor's gross salary 53,000 55.4 Maria's salary (part-time) 32,000 33.4 Interest and dividends 1,800 1.9 Bonus 1,000 1.0 Tax refunds 200 0.2 Net rental income 7,720 8.1 Total Income $95,720 100.0% EXPENDITURES Fixed Expenses Mortgage loan payments 14,400 15.0 Real estate taxes 4,800 5.0 Homeowner's Insurance 1,200 1.3 Automobile loan payments 6,000 Automobile insurance and registration 2,100 2.2 Life insurance premiums 1,200 1.3 Medical Insurance (employee portion) 2,800 2.9 Emergency fund savings 2,400 2.5 Revolving savings fund 1,800 1.9 Federal income taxes 10,000 10.4 State income taxes 2,600 2.7 City income taxes 600 0.6 Social Security taxes 6,500 6.8 Personal property taxes 1,020 1.1 Retirement IRAS 6,000 6.3 Total fixed expenses $63,420 66.3% Variable Expenses Food 7,000 7.3 Utilities 3,600 Gasoline and maintenance 4,200 Medical expenses 3,400 3.6 6.3 o Se Ch 03: End-of-Chapter Problems - Financial Statements, Tools, and Budgets 6,000 $63,420 6.3 66.3% 7.3 3.8 Retirement IRAS Total fixed expenses Variable Expenses Food Utilities Gasoline and maintenance Medical expenses Medicines Clothing and upkeep Church Gifts Personal allowances Children's allowances Miscellaneous Total Variable Expenses Total Expenses SURPLUS (DEFICIT) 7,000 3,600 4,200 3,400 1,750 1,950 2,400 1,400 3,000 3,200 400 $32,300 $95,720 $0 3.6 1.8 2.0 2.5 1.5 3.1 3.3 0.4 33.7% 100.0% 0.0% Ratio Liquidity Ratio Asset-to-Debt Ratio Debt-to-Income Ratio Ratios for Evaluating the Financial Progress Calculation Example Monetary assets divided by monthly $12,750/$7,977 - 1.60 ratio expenses or about 1 1/2 months Total assets/total debt $393,350/$100,620 - 3.909 or a 3.9 to 1 ratio Annual debt repayments/gross incomex $20,400/595,720 - 21.31% 100 Monthly nonmortgage debt $500/$6,102 -0.082 or payments/monthly disposable (not gross) 8.2% Income Investment assets/total assets $170, 100/$393,350 - 0.432 or 43.2% Debt Payments-to- Disposable Income Ratio Investment Assets-to- Total Assets Ratio Respond to the following questions. a. How would you interpret their investment assets to total assets ratio? This is an -Select ratio for a couple with children. The Hernandez family appears to have too few monetary assets compared with tangible and investment assets. How would you suggest that they remedy that situa the next few years? The input in the box below will not be graded, but may be reviewed and considered by your instructor blank o Respond to the following questions a. How would you interpret their investment assets to total assets ratio? This is an -Select ratio for a couple with children The Hernandez family appears to have too few monetary assets compared with tangible and investment assets. How would you suggest that they remedy that situation over the next few years? The input in the box below will not be graded, but may be reviewed and considered by your instructor. blank b. What are your thoughts on the Hernandez's liquidity ratio? How might they address any issues you see? The input in the box below will not be graded, but may be reviewed and considered by your instructor blank c. Comment on the couple's diversification of their investment assets The input in the box below will not be graded, but may be reviewed and considered by your instructor blank d. The Hernandezes seem to receive most of their income from employment rather than investments. What actions would you recommend for them to remedy that imbalance over the next few years? The input in the box below will not be graded, but may be reviewed and considered by your instructor blank e. The Hernandezes want to take a two-week vacation next summer, and they have only eight months to save the necessary $3,400 What reasonable changes in expenses might they consider to increase net surplus and make the needed $425 per month ($3,400/8)? The input in the box below will not be graded, but may be reviewed and considered by your instructor. They could eat out less, don't buy things that you don't need but want for a little bit, and eBook Do the Math 3-1 Ratio Analyses for Victor and Maria Review the financial statements of Victor and Maria Hernandez and the financial ratios provided below. Percent 0.3 1.1 0.7 0.8 0.2 0.2 3.2% Balance Sheet for a couple with Two Children- Victor and Maria Hernandez, January 1, 2018 Dollars ASSETS Monetary Assets Cash on hand 1,200 Savings account 4,200 Victor's checking account 2,700 Maria's checking account 3,300 Tax refund due 700 Rent receivable 650 Total Monetary Assets $ 12,750 Tangible Assets Home 192,000 Personal property 9,000 Automobiles 9,500 Total Tangible Assets $ 210,500 Investment Assets Fidelity mutual funds 4,000 Scudder mutual fund 5,000 Ford Motor Company stock 2,500 New York 2038 bonds 3,800 Life insurance cash value 5,400 IRA accounts 34,400 Real estate investment 115,000 Total Investment Assets $170,100 Total Assets $393,350 LIABILITIES Short-Term liabilities Dentist bill due 220 Credit card debt 1,600 Total Short-Term Liabilities $ 1,820 Long-Term liabilities Vehicle loan 6,900 Home mortgage loan 91.900 48.8 2.3 2.4 5315% 1.0 1.3 0.6 1.0 1.4 8.7 29.2 43.2% 100% 0.1 0.4 0.5% 1.8 23.4 TOUS, and Budgets $ 1,820 0.5% Total Short-Term Liabilities Long-Term liabilities Vehicle loan Home mortgage loan Total Long-Term Liabilities Total Liabilities Net Worth Total Liabilities and Net Worth 6,900 91,900 $ 98,800 $100,620 $292,730 $393,350 1.8 23.4 25.1% 25.6% 74.4% 100.0% Cash Flow Statement for a couple with Two Children- Victor and Maria Hernandez, January 1, 2018 - December 31, 2018 Dollars Percent INCOME Victor's gross salary 53,000 55.4 Maria's salary (part-time) 32,000 33.4 Interest and dividends 1,800 1.9 Bonus 1,000 1.0 Tax refunds 200 0.2 Net rental income 7,720 8.1 Total Income $95,720 100.0% EXPENDITURES Fixed Expenses Mortgage loan payments 14,400 15.0 Real estate taxes 4,800 5.0 Homeowner's Insurance 1,200 1.3 Automobile loan payments 6,000 Automobile insurance and registration 2,100 2.2 Life insurance premiums 1,200 1.3 Medical Insurance (employee portion) 2,800 2.9 Emergency fund savings 2,400 2.5 Revolving savings fund 1,800 1.9 Federal income taxes 10,000 10.4 State income taxes 2,600 2.7 City income taxes 600 0.6 Social Security taxes 6,500 6.8 Personal property taxes 1,020 1.1 Retirement IRAS 6,000 6.3 Total fixed expenses $63,420 66.3% Variable Expenses Food 7,000 7.3 Utilities 3,600 Gasoline and maintenance 4,200 Medical expenses 3,400 3.6 6.3 o Se Ch 03: End-of-Chapter Problems - Financial Statements, Tools, and Budgets 6,000 $63,420 6.3 66.3% 7.3 3.8 Retirement IRAS Total fixed expenses Variable Expenses Food Utilities Gasoline and maintenance Medical expenses Medicines Clothing and upkeep Church Gifts Personal allowances Children's allowances Miscellaneous Total Variable Expenses Total Expenses SURPLUS (DEFICIT) 7,000 3,600 4,200 3,400 1,750 1,950 2,400 1,400 3,000 3,200 400 $32,300 $95,720 $0 3.6 1.8 2.0 2.5 1.5 3.1 3.3 0.4 33.7% 100.0% 0.0% Ratio Liquidity Ratio Asset-to-Debt Ratio Debt-to-Income Ratio Ratios for Evaluating the Financial Progress Calculation Example Monetary assets divided by monthly $12,750/$7,977 - 1.60 ratio expenses or about 1 1/2 months Total assets/total debt $393,350/$100,620 - 3.909 or a 3.9 to 1 ratio Annual debt repayments/gross incomex $20,400/595,720 - 21.31% 100 Monthly nonmortgage debt $500/$6,102 -0.082 or payments/monthly disposable (not gross) 8.2% Income Investment assets/total assets $170, 100/$393,350 - 0.432 or 43.2% Debt Payments-to- Disposable Income Ratio Investment Assets-to- Total Assets Ratio Respond to the following questions. a. How would you interpret their investment assets to total assets ratio? This is an -Select ratio for a couple with children. The Hernandez family appears to have too few monetary assets compared with tangible and investment assets. How would you suggest that they remedy that situa the next few years? The input in the box below will not be graded, but may be reviewed and considered by your instructor blank o Respond to the following questions a. How would you interpret their investment assets to total assets ratio? This is an -Select ratio for a couple with children The Hernandez family appears to have too few monetary assets compared with tangible and investment assets. How would you suggest that they remedy that situation over the next few years? The input in the box below will not be graded, but may be reviewed and considered by your instructor. blank b. What are your thoughts on the Hernandez's liquidity ratio? How might they address any issues you see? The input in the box below will not be graded, but may be reviewed and considered by your instructor blank c. Comment on the couple's diversification of their investment assets The input in the box below will not be graded, but may be reviewed and considered by your instructor blank d. The Hernandezes seem to receive most of their income from employment rather than investments. What actions would you recommend for them to remedy that imbalance over the next few years? The input in the box below will not be graded, but may be reviewed and considered by your instructor blank e. The Hernandezes want to take a two-week vacation next summer, and they have only eight months to save the necessary $3,400 What reasonable changes in expenses might they consider to increase net surplus and make the needed $425 per month ($3,400/8)? The input in the box below will not be graded, but may be reviewed and considered by your instructor. They could eat out less, don't buy things that you don't need but want for a little bit, and