Financial Ratios Basic Liquidity Ratio Liquid Assets to Net Worth Ratio Solvency Ratio 2.14 20.83% 48.98% Debt to Asset Ratio 51.02% Debt Service Ratio 7.79% Investment Assets to Net Worth Ratio 183.33% Saving Ratio 27.27% (a) Use the Financial Ratios to assess and appraise the financial position of Kenneth (b) Suggest and discuss ways for Kenneth to improve his financial position.
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- Carlos opens a dry cleaning store during the year. He invests 30,000 of his own money and borrows 60,000 from a local bank. He uses 40,000 of the loan to buy a building and the remaining 20,000 for equipment. During the first year, the store has a loss of 24,000. How much of the loss can Carlos deduct if the loan from the bank is nonrecourse? How much does Carlos have at risk at the end of the first year?Jerry and his wife, Joanie, own a successful concrete company that is organized as a corporation. Jerry spends all his time running the company, whereas Joanie has a full-time job as a legal secretary. The corporation pays Joanie a salary of 45,000 a year as vice president.Se Ri Pak, age 23, recently graduated with her bachelor's degree in library and information sciences. She is about to take her first professional position as an archivist with a civil engineering firm in a rapidly expanding area in the U.S. Southwest. While in school, Se Ri worked part time, earning about $8000 per year. For the past two years, she has managed to put $1000 each year into an individual retirement account (IRA), Se Ri owes $15,000 in student loans on which she is obliged now to begin making payments. Her new job will pay $45,000. Se Ri may begin participating in her employer's 401(k) retirement plan immediately, and she can contribute up to 6 percent of her salary to the plan. Her employer will contribute 1/2 of 1 percent for every 1 percent that Se Ri contributes. What do you recommend to Se Ri on the importance of personal finance regarding: 3. Factoring the current state of the economy into her personal financial planning?
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- Ken is a self-employed architect in a small firm with four employees: himself, his office assistant, and two drafters, all of whom have worked for Ken full-time for the last four years. The office assistant earns $30,000 annually, and each drafter earns $40,000. After deducting all expenses and one-half of self-employment taxes, Ken's net earnings are $310,000. Ken is considering whether to establish a SEP plan and has a few questions: Is he required to cover his employees under the plan? Why? Or Why not? If his employees must be covered, what is the maximum amount Ken can contribute on their behalf? What is the maximum amount Ken can contribute for himself if the employees are not covered? If Ken is required to contribute to his employees and chooses to contribute the maximum amount, what is the maximum amount Ken can contribute for himself? (Hint, calculate the employees' amount first), Ignore any changes in Ken’s self-employment tax.Freddie owns an electronics outlet in Houston. This year, he paid $600 to register for a four-day course in management in Oklahoma City. Freddie paid $800 in airfare and $1,000 for five nights' lodging. After the course, Freddie spent the last day sightseeing. During the trip, Freddie also paid $140 a day for meals, and $80 a day for a rental car. What amount of these travel expenditures may Freddie deduct as business expenses?Jerry, who is age 56, was just called into the president’s office at Napa Sunrise, Inc. He just learned that his position has been eliminated in the recent reorganization. While he is devastated, he thinks he may attempt to retire and work on his golf game. Jerry has a retirement plan at Napa Sunrise, which permits lump-sum distributions, and has accumulated some personal savings, but not enough to sustain him until age 65. Jerry also worked for KMA for 30 years and expects to receive a pension from KMA at age 65. He also expects to receive Social Security at age 67. Which of the following is correct? A. Jerry could begin taking substantially equal periodic payments, which would avoid the early withdrawal penalty, but he could not stop the payments until age 59 ½. B. Jerry cannot access his funds at Napa Sunrise prior to full retirement age for the plan. C. Jerry can take any distribution permitted by the Napa Sunrise plan and avoid the early withdrawal penalty…
- Harry has worked at a medium-size interior design firm for five years and earns a salary of $4,080 per month. He also receives $3,000 in interest income once a year from a trust fund set up by his deceased father's estate. Belinda earns a salary of $6,400 per month, and she has many job-related benefits including flexible benefits program, life insurance, health insurance, a 401(k) retirement program, workplace financial education, and a credit union. The Johnsons live in an old apartment located approximately halfway between their places of employment. However, their rent will increase by $100 a month in July. Harry drives about ten minutes to his job, and Belinda travels about 15 minutes via public transportation to reach her downtown job. Harry and Belinda's apartment is very nice, but small, and it is furnished primarily with furniture given to them by some of his friends. Soon after getting married, Harry and Belinda decided to begin their financial planning. Fortunately each had…a). Akua intends to save 1,000 a year for her retirement until she is 55 years old, at this age, she will stop paying into the account, though she will retire at 65. If the retirement account earns 10% interest per year, how much will Akua have saved at age 65? She is 35 years at the moment. b). Financial markets and its institutions are seen as the central nervous system of an economy and must be regulated at all times. Discuss the key roles played by financial markets, and outline two (2) reasons why they must be regulated. c). Explain the difference between money market and capital market and mention two (2) securities traded in each of these markets. d). MTN was able to raise only GH¢1.15billion out of the expected GH¢3.48billion from its Initial Public Offering which lasted from May 29, 2018 to July 31, 2018. Even though the share sale exceeded the minimum of GH¢348million or 10 percent of the total required for the offer to be declared successful, it still represented only 32.97…Mr Ramu is a chief operating office of the company and being paid a salary of RM15,625 per month. His percentage portion for Employees Provident Fund contribution is 17%. He intent to buy a car worth RM290,000 and would be making a bank loan of RM100,000 to finance building an extension for his house kitchen. He also plans to bring his wife (housewife) and four children (two studying in a local university and the rest in secondary school) for an overseas holiday trip with an estimate cost RM15,000. He also plans to have a servant and a driver where he would be paying them with an annual salary of RM15,000 and RM24,000 respectively. His company is willing to prepared to restructure his remuneration package to accommodate the above needs. REQUIRED: (a) Explain how Mr Ramu’s remuneration package can be restructure on a more tax efficient basis based on the above information only. ( b) Based on (a), which are item (s) in the proposed remuneration package is/are taxable or exempted. (c)…