Sarah McDaniel would like your help in starting her financial plan. Review her financial and personal information before answering the following questions. 1. Using the January 1, 2012 asset and liability information, develop a balance sheet for Sarah McDaniel. Assume Sarah has no unpaid bills. Assets on a balance sheet should be listed at the market current value, not the purchase price. Liabilities are listed at the current outstanding balance. What is her net worth? 2. Using the income and expenditure information for 2011, complete a cash flow statement for Sarah. Date this statement January through December of 2011. Be sure to total your entries for each row in the third column of the cash flow statement. Does Sarah have a cash surplus or a cash deficit in 2011? What impact would the 2011 cash surplus (deficit) have on their January 1, 2012 balance sheet? 3. Based on Sarahs financial statements constructed in questions 1 and 2, calculate the following ratios: -- Liquidity Ratio -- Savings Ratio -- Debt Service Ratio -- Solvency Ratio See your textbook for guidance on what to include when calculating the financial ratios. 4. Based on the information in the original case and in their financial statements, list at least 3 positive and 3 negative aspects of Sarahs current financial status. After reading the text and class notes, you now probably realize that Sarahs financial goals are not defined well enough in the original case to serve as the basis for her financial plan and cash budget. Upon further discussion she has restated her financial goals as follows: * To pay off all of her credit card balances within the next 2 years. * To buy a larger house for her family. Sarahs grandmother's estate will be settled shortly and she expects to receive $50,000 to help with the down payment and other front-end costs. * To have a total of $15,000 accumulated in her money market account in 2 years to be used as her emergency fund. She currently has $4,342 accumulated. * To save $5,000 for the down payment on a new car in 2 years. * To contribute 6% of her gross salary to her 401(k) plan for retirement. * To have $75,000 for Erics college education in 11 years. * To establish a regular savings/investment program to accomplish these goals. 5. How much would Sarah have to save in 2012 to be on track in meeting her goals for: * Pay off her credit cards * Her emergency fund (remember she already has some money in a money market account) * Down payment on the new car * College education fund * The contribution to her 401(k) Use future value calculations to calculate the amount that must be saved annually for her credit card, emergency fund, car, and college goals. Assume Sarah can earn 3% after taxes on her credit card, emergency fund and car goals and 11% on the college fund. You will not use future value calculations when figuring the amount of savings required to meet her 401(k) fund goals since you were told the annual contribution she wanted to make. Remember to label each goal and add the required sums for each goal together to find the TOTAL ANNUAL SAVINGS required to meet her goals. 6. Can Sarah achieve all of her stated goals considering her current income and expenditure pattern? List specific recommendations you would make to help her achieve her goals.