Task: Review the financial statements of Victor and Maria Hernandez presented below. Revise information presented about financial ratios introduced on lecture slides and respond to the following questions: Balance Sheet as the end of the last financial year (31 December 2021) 1200.00 0.08% Assets Monetary assets Cash on hand Term deposit account Victor's savings account Maria's savings account Tax refund due 4200.00 0.29% 2700.00 0.18% 3300.00 0.22% 700.00 0.05% Rent receivable 650.00 0.04% Total monetary assets $12750.00 0.87% Tangible assets Home 192000 13.07% Personal property 9000 0.61% Car 9500 0.65% Total tangible assets $210500 14.32% 4500 0.31% 5000 0.34% 2800 0.19% Investment assets Macquarie Australian Fixed Interest Fund Australian Unity Funds Telstra company stock AfterPay company Stock Life insurance cash value Superannuation/Pension accounts Real estate investment 4000 0.27% 800000 54.44% 130000 8.85% 300000 20.41% Total investment assets $1246300 84.81% Total assets $1469550 100.00% Liabilities Short-term liabilities Dentist bill due 220 0.01% Credit card debt 1600 0.11% Total short-term liabilities $1820 0.12% Long-term liabilities Car loan 7700 0.52% Home loan 92000 6.26% Total long-term liabilities $99700 6.78% Total liabilities $101520 6.91% Net worth $1368030 93.09% $1469550 100.00% Total liabilities and net worth Cash Flow Statement (For the year January 2021- December 2021) Dollars Percentage INCOME 60000 56.75% Victor's gross salary Maria's gross salary 35000 33.11% Interest and dividends 1800 1.70% Bonus 1000 0.95% Tax refunds 200 0.19% Net rental income 7720 7.30% $105720 100.00% Total income EXPENDITURES 21000 19.86% 4800 4.54% Fixed expenses Mortgage loan payments Council rates Homeowner's insurance Car loan payments Car insurance and registration Life insurance premiums 1200 1.14% 6000 5.68% 2100 1.99% 1200 1.14% Private health insurance 2800 2.65% 2400 2.27% 1800 1.70% Emergency fund savings Revolving savings fund Income taxes Medicare levy 13200 12.49% 1900 1.80% Land tax 1020 0.96% 4000 3.78% Education fees Superannuation fund 6000 5.68% Total fixed expenses $69420 65.66% Variable expenses Food 8000 7.57% 3600 3.41% Utilities Petrol and car maintenance 4200 3.97% Medical expenses 3400 3.22% Medicines 1750 1.66% 4950 4.68% Clothing and upkeep Donations 2400 2.27% 1.32% Gifts 1400 Personal allowances 3000 2.84% Children's allowances 3200 3.03% Miscellaneous 400 0.38% $36300 34.34% Total variable expenses Total expenses SURPLUS (DEFICIT) $105720 $0 100.00% 0.00% Questions: Review the financial statements of Victor and Maria Hernandez and the financial ratios and respond to the following questions: a. How would you interpret their investment assets to total assets ratio? 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? b. What are your thoughts on the Hernandezes liquidity ratio? How might they address any issues you see? c. Comment on the couple's diversification of their investment assets. 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? e. The Hernandezes want to take a two-week vacation next summer, and they have only eight months to save the necessary $3400. What reasonable changes in expenses might they consider to increase net surplus and make the needed $425 per month ($3400/8)