Personal Financial Statement Ratios Part 2

Calculate the following Financial Ratios: a) Liquidity Ratio b) Savings Ratio c) Front End Ratio d) Back End Ratio e) Net Investment Assets to Net Worth In your view, based on the statements and ratio analysis, briefly describe Mary strengths and weaknesses in financial position.

Part 3

Prepare a Pro Forma Cash Flow Statement 10 Years in the Future

You should apply inflation or escalation to line items as appropriate

How would this change Marys ability to save?

Please solve the questions in Part 2 and Part 3 thanks.

Assets, Liabilities and Net Worth . . O Mary has come to you for help preparing personal financial statements. She presents you with the following facts. Her assets and liabilities include: $3,000 in a Checking account and $5,000 in a Savings account Her Brokerage Account has $15,000 in Stocks With her employer she has a 401K with a balance of $50,000. She has cash value life Insurance with a $250,000 death benefit and a cash value of $25,000 Her home was purchased for $300,000 and has a mortgage balance of $250,000, currently worth $320,000. A car purchased for $35,500 where the current blue book value is $15,000 and she owes $18,000 on the auto loan Mary has a Student Loan originally for $60,000 with a current Principal Balance of 30,000 Lastly, she has Credit Card Balances of $8,500 Assets, Liabilities and Net Worth $ LIABILITIES Liabilities Credit card balance $ Student Loan Debt Auto note balance Mortgage Balance Total Liabilities NET WORTH STATEMENT ASSETS Cash/Cash Equivalents Checking account Savings Account Money Market Account Life Insurace Cash Value Total Cash/Cash Equivalents Invested Assets Brokerage Account Business IRAS 401k or Vested Pension Total Invested Assets Use Assets Residence Automobiles Personal property Total Use Assets TOTAL LIABILITIES NET WORTH - TOTAL LIABILITIES AND NET WORTH TOTAL ASSETS Cash Flow Statement . Based on current income and expenses, Mary provides the following breakdown: Her gross salary is $122,500 annually with Income Tax and FICA of $26,950 She has dividend income of $800 per year and interest income of $50 annually Her mortgage payment is $1,700 monthly; property taxes are $4,000 per year Mary's auto payment is $500 a month Her Homeowner's insurance premium is $900 annually, and all other insurance products are around $2,000 annually She has monthly expenses of $700 for food, $500 for transportation, $400 for clothing and personal, 500 for entertainment & vacation, $350 for medical and dental, $250 for utilities Mary Pays $600 Monthly for Her Student Loan Mary pays $600 monthly for credit card payments not separately categorized Mary estimates Miscellaneous Expenses of about $5,000 by subtracting expenses she can identify and savings from her Total Inflows Cash Flow Statement Outflows Inflows Totals $ INFLOWS Gross salaries Dividend income Interest income Other Income TOTAL INFLOWS OOOOO $ 0 0 $ $ Cash Flow Statement $ 0 OUTFLOWS Savings and Investments Fixed Outflows Housing Property Taxes Student Loan Payments Auto Loan Payments Insurance premiums Total Fixed Outflows Variable Outflows Taxes Food Transportation Clothing/personal Entertainment/vacation Medical/dental care Utilities/household Credit card payments Miscellaneous Total Variable Outflows TOTAL OUTFLOWS $ OOOOOOOOO 0 $ 0 Personal Financial Statement Ratios - Part 2 Calculate the following Financial Ratios: a) Liquidity Ratio b) Savings Ratio c) Front End Ratio d) Back End Ratio e) Net Investment Assets to Net Worth In your view, based on the statements and ratio analysis, briefly describe Mary strengths and weaknesses in financial position Personal Financial Statement Ratios - Part 3 Prepare a Pro Forma Cash Flow Statement 10 Years in the Future 0 You should apply inflation or escalation to line items as appropriate How would this change Mary's ability to save? Cash Flow Statement Monthly Outflows Inflows Totals $ INFLOWS Gross salaries Dividend income Interest income Other Income TOTAL INFLOWS 122,500 800 50 0 123,350 123,350 $ $ 11,300 9.2% 1700 600 500 20,400 4,000 7,200 6,000 2,900 $ 40,500 OUTFLOWS Savings and Investments Fixed Outflows Housing Property Taxes Student Loan Auto loan payments Insurance premiums Total Fixed Outflows Variable Outflows Taxes Food Transportation Clothing/personal Entertainment/vacation Medical/dental care Utilities/household Credit card payments Miscellaneous Total Variable Outflows TOTAL OUTFLOWS 700 500 400 500 350 250 600 26,950 8,400 6,000 4,800 6,000 4,200 3,000 7,200 5,000 71,550 $ 112,050 $ 3,000 5,000 LIABILITIES Liabilities Credit card balance $ Student Loan Debt Auto note balance Mortgage Balance Total Liabilities 8,500 30,000 18,000 250,000 306,500 25,000 33,000 NET WORTH STATEMENT ASSETS Cash/Cash Equivalents Checking account Savings Account Money Market Account Life Insurace Cash Value Total Cash/Cash Equivalents Invested Assets Brokerage Acct Business IRAs 401k or Vested Pension Total Invested Assets Use Assets Residence Automobiles Personal property Total Use Assets 15,000 50,000 65,000 TOTAL LIABILITIES 306,500 NET WORTH 126,500 320,000 15,000 335,000 TOTAL LIABILITIES AND NET WORTH TOTAL ASSETS 433,000 433,000 Assets, Liabilities and Net Worth . . O Mary has come to you for help preparing personal financial statements. She presents you with the following facts. Her assets and liabilities include: $3,000 in a Checking account and $5,000 in a Savings account Her Brokerage Account has $15,000 in Stocks With her employer she has a 401K with a balance of $50,000. She has cash value life Insurance with a $250,000 death benefit and a cash value of $25,000 Her home was purchased for $300,000 and has a mortgage balance of $250,000, currently worth $320,000. A car purchased for $35,500 where the current blue book value is $15,000 and she owes $18,000 on the auto loan Mary has a Student Loan originally for $60,000 with a current Principal Balance of 30,000 Lastly, she has Credit Card Balances of $8,500 Assets, Liabilities and Net Worth $ LIABILITIES Liabilities Credit card balance $ Student Loan Debt Auto note balance Mortgage Balance Total Liabilities NET WORTH STATEMENT ASSETS Cash/Cash Equivalents Checking account Savings Account Money Market Account Life Insurace Cash Value Total Cash/Cash Equivalents Invested Assets Brokerage Account Business IRAS 401k or Vested Pension Total Invested Assets Use Assets Residence Automobiles Personal property Total Use Assets TOTAL LIABILITIES NET WORTH - TOTAL LIABILITIES AND NET WORTH TOTAL ASSETS Cash Flow Statement . Based on current income and expenses, Mary provides the following breakdown: Her gross salary is $122,500 annually with Income Tax and FICA of $26,950 She has dividend income of $800 per year and interest income of $50 annually Her mortgage payment is $1,700 monthly; property taxes are $4,000 per year Mary's auto payment is $500 a month Her Homeowner's insurance premium is $900 annually, and all other insurance products are around $2,000 annually She has monthly expenses of $700 for food, $500 for transportation, $400 for clothing and personal, 500 for entertainment & vacation, $350 for medical and dental, $250 for utilities Mary Pays $600 Monthly for Her Student Loan Mary pays $600 monthly for credit card payments not separately categorized Mary estimates Miscellaneous Expenses of about $5,000 by subtracting expenses she can identify and savings from her Total Inflows Cash Flow Statement Outflows Inflows Totals $ INFLOWS Gross salaries Dividend income Interest income Other Income TOTAL INFLOWS OOOOO $ 0 0 $ $ Cash Flow Statement $ 0 OUTFLOWS Savings and Investments Fixed Outflows Housing Property Taxes Student Loan Payments Auto Loan Payments Insurance premiums Total Fixed Outflows Variable Outflows Taxes Food Transportation Clothing/personal Entertainment/vacation Medical/dental care Utilities/household Credit card payments Miscellaneous Total Variable Outflows TOTAL OUTFLOWS $ OOOOOOOOO 0 $ 0 Personal Financial Statement Ratios - Part 2 Calculate the following Financial Ratios: a) Liquidity Ratio b) Savings Ratio c) Front End Ratio d) Back End Ratio e) Net Investment Assets to Net Worth In your view, based on the statements and ratio analysis, briefly describe Mary strengths and weaknesses in financial position Personal Financial Statement Ratios - Part 3 Prepare a Pro Forma Cash Flow Statement 10 Years in the Future 0 You should apply inflation or escalation to line items as appropriate How would this change Mary's ability to save? Cash Flow Statement Monthly Outflows Inflows Totals $ INFLOWS Gross salaries Dividend income Interest income Other Income TOTAL INFLOWS 122,500 800 50 0 123,350 123,350 $ $ 11,300 9.2% 1700 600 500 20,400 4,000 7,200 6,000 2,900 $ 40,500 OUTFLOWS Savings and Investments Fixed Outflows Housing Property Taxes Student Loan Auto loan payments Insurance premiums Total Fixed Outflows Variable Outflows Taxes Food Transportation Clothing/personal Entertainment/vacation Medical/dental care Utilities/household Credit card payments Miscellaneous Total Variable Outflows TOTAL OUTFLOWS 700 500 400 500 350 250 600 26,950 8,400 6,000 4,800 6,000 4,200 3,000 7,200 5,000 71,550 $ 112,050 $ 3,000 5,000 LIABILITIES Liabilities Credit card balance $ Student Loan Debt Auto note balance Mortgage Balance Total Liabilities 8,500 30,000 18,000 250,000 306,500 25,000 33,000 NET WORTH STATEMENT ASSETS Cash/Cash Equivalents Checking account Savings Account Money Market Account Life Insurace Cash Value Total Cash/Cash Equivalents Invested Assets Brokerage Acct Business IRAs 401k or Vested Pension Total Invested Assets Use Assets Residence Automobiles Personal property Total Use Assets 15,000 50,000 65,000 TOTAL LIABILITIES 306,500 NET WORTH 126,500 320,000 15,000 335,000 TOTAL LIABILITIES AND NET WORTH TOTAL ASSETS 433,000 433,000