ractice: Chapter 02 Using Financial Statements and Budgets 2. Comment on the Webbs' finarveal condition regarding (a) solvency, (b) liquidity, (c) savings, and (d) abaity to pay debts promptly. Round the answers to twe decimal places. Enter your answers as a percentage. a. Solvency ratio b. Lquidity ratio c. Savings ratio d. Debt Service rotio 1. Using this information and Worksheet 2.1 and Worksheet 2.2, construct the Webbs' balance sheot and incorne end expense statement for the year anding December 31, 2020. Enter al expense amounts as positive values BALANCE SHEET Despite Ashton's arguments, Melody feels that they should carefully examine their financial condibon in order to do some serious planning. She has gathered the following financial information for the year ending December 31,2020 . Critical Thinking Case 1 The Webbs' Verslon of Financlat Planning 22.45 Ashton and Melody Webb are a married couple in their mid-20s. Ashton has a good start as an electrical engineer and Melooy works as a saies representative. Since their marriage four yoars ago, Ashton ond Melody have been living comfortably. Their income has exceeded their expenses, and they have accumilated an onvable net worth. This includes $10,000 that they have built up in savings and investments. Because their inceme has always been more than enough for them to have the lifestyle they desire, the Webss have done no fanancial planning. Molody has just learned that she's pregnant. Sbe's concerned about how theyal make ends meet if she quits work after their child is born. Each time she and Ashton discuss the matter, he telis her nok to worry because we've aways managed to pay our bils on time." Melcdy cant understand his attitude because her income will be completery eliminated. To convince Melody that there's no need for concern, Ashton peints out that their expenses tast year, but for the common stock purchase, were about equai to his take-home pay. With an anticipated promotion end an expocted 10 percent pay raine, his income next yoar shouid exceed this amount. Ashton aivo points out that they can reduce luxurtes (trips, recreotion, end entertainment) end con always drow down their sawings or sell some of ther steck if they get in a bind. When Meiody asks about the long-run implicotions for their fnances, Ashton says there will be "no problems" because has boss has assured him that he hat a bright future with the engineering firm. Ashton aso emphasizes that Melody can go back to work in a few years if necessary. Despite Ashton's arguments, Melody feets that they should carefulity examine their financial condition in orcer to do spme
