John and Mary, who make $50,000 per year, calculated their average tax rate at 15 percent. They contribute 12 percent of their income to charity and pay themselves 10 percent of their income. They have a fixed 6%, $100,000 mortgage with 25 years to maturity, a 3 years $20,000 auto-loan at a fixed 7% rate, and a $10,000, 10 years to maturity and 3% fixed rate college loan. In addition, utilities and property taxes were $2,270 per year, food was $6,000, insurance was $1,500, and other expenses were $5,430.

John and Mary would like you to help them understand where they are financially. You have John and Marys balance sheet and income statements, which were prepared earlier. They ask for help to calculate each of the key liquidity, debt, and savings ratios (see Chapter 2). Using the data and calculations, comment on how well they are doing. You need to carefully explain and design your analysis. What can and should they be doing to improve