EBK PERSONAL FINANCE TAX UPDATE
13th Edition
ISBN: 9780357438930
Author: FORGUE
Publisher: VST
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Textbook Question
Chapter 3, Problem 3DTM
Ratio Analyses. Now that Jennifer better understands her situation she wants to do some analysis of what she has found. Given her balance sheet and cash-flow statements calculate the following ratios:
- Liquidity ratio
- Asset-to-debt ratio
- Debt-to-income ratio
- Debt payments-to-disposable income ratio
- Investment assets-to-total assets ratio
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Which of the following ratios would a lender find most useful in monitoring a
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Page 6
CHAPTER 2 ASSIGNMENT
Your client is having trouble figuring out where all her money goes each month. Here is her financial information for you to review:
$355*
STOCKS IN BROKERAGE ACCT
$5,500
MASTER CARD BILL
$245*
MONTHLY PAYCHECK (GROSS) $3,000
PAYROLL TAX WITHHELD
$ 600
MONTHLY MORTGAGE PAYMENT $530
MUTUAL FUNDS
$2,100
401(K) RETIREMENT ACCT
$4,500
$265
$275*
SAVINGS ACCT BALANCE
$2,300
MONTHLY CLOTHING EXPENSES $45
MONTHLY VISA BILL
MONTHLY CAR PAYMENT
MONTHLY UTILITY BILL
CHECKING ACCOUNT BALANCE
QUARTERLY AUTO INSURANCE (NOT YET DUE)
ANTIQUE COIN COLLECTION
CONDOMINIUM
MONTHLY GROCERIES
AUTOMOBILE
FURNITURE
MORTGAGE BALANCE
AUTO LOAN BALANCE
OTHER PERSONAL PROPERTY
OTHER MONTHLY CASH EXPENSES
ANNUAL MEDICAL EXPENSES
*Bills represent the average of the prior month's charges AND ALSO current month's expenses.
$825
$450
$3,250
$65,000
$225
$9,000
$5,500
$50,000
$4,225
$8,000
$150
$264
Using the data in the picture, compute the following: Current cash debt coverage and Free Cash Flow
Chapter 3 Solutions
EBK PERSONAL FINANCE TAX UPDATE
Ch. 3.1 - Prob. 1CCCh. 3.1 - What is the biggest financial worry of most...Ch. 3.1 - Prob. 3CCCh. 3.1 - Prob. 4CCCh. 3.2 - Prob. 1CCCh. 3.2 - Prob. 2CCCh. 3.2 - Prob. 3CCCh. 3.2 - Prob. 4CCCh. 3.2 - Which two financial ratios for evaluating...Ch. 3.3 - Prob. 1CC
Ch. 3.3 - Prob. 2CCCh. 3.4 - Prob. 1CCCh. 3.4 - Identify two money topics that you think might...Ch. 3.5 - Prob. 1CCCh. 3.5 - What are budget estimates? Offer some suggestions...Ch. 3.5 - How might one go about revising budget estimates...Ch. 3.5 - Prob. 4CCCh. 3.5 - Name different ways to handle budget variances.Ch. 3 - Prob. 1DTMCh. 3 - Calculating Net Worth and Net Surplus. Jennifer...Ch. 3 - Ratio Analyses. Now that Jennifer better...Ch. 3 - Prob. 4DTMCh. 3 - Prob. 5DTMCh. 3 - Prob. 6DTMCh. 3 - Prob. 1FPCCh. 3 - Prob. 2FPCCh. 3 - Prob. 3FPCCh. 3 - Prob. 4FPCCh. 3 - Prob. 5FPCCh. 3 - Prob. 1BYOPFMCh. 3 - Prob. 4BYOPFMCh. 3 - Prob. 5BYOPFMCh. 3 - Prob. 7BYOPFMCh. 3 - Prob. 10BYOPFMCh. 3 - Prob. 11BYOPFM
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- Using balance sheet information, the ____ ratio indicates your ability to meet current debt payments. Group of answer choices savings liquidity cash debt service solvencyarrow_forwardDiscuss and explain how using debt ratios applies to your personal finances.arrow_forwardWhat findings can you give about these FINANCIAL PROJECTIONS below. (Feasibilty Study)arrow_forward
- Do the balance sheet, income statement, and statement of cash flows provide all of the information that a prospective lender or investor could require? What more facts do you want to look into?arrow_forwardDiscuss the important of financial market, then illustrate with a diagram the flowof funds from lenders to borrowers in a financial system.arrow_forwardThis section outlines the projected financial statements. The financial statements should include detailed notes/explanations and assumptions to substantiate your projections. Imaginary numbers can be used in the statement Key assumptions Provide the mentioned Financial statements Income statement Balance sheet Cash flow statement Break-even analysisarrow_forward
- Do the balance sheet, income statement, and statement of cash flows contain all the information you might want as a potential lender or investor? What other information would you like to examine?arrow_forwardDescribe how you would do a financial analysis (refer to trends and ratios)arrow_forwardIllustrate with a diagram the flow of funds from lenders to borrowers in a financial system. Diagram must include: Savers Borrowers Financial markets Function of the financial intermediaries Function of the financial markets Direct finance Indirect financearrow_forward
- Investigate and evaluate the current literature to determine the relative value of the income statement against the flow of cash statement in the financial statement. When it comes to financial reporting, why are investors drawn to the income statement and cash flow statement?arrow_forwardWhen calculating free cash flow using balance sheet and income statement why do we add back after-tax interest on debt?arrow_forwardRatios that indicate relationships between deposits, borrowed funds and equity in financing loans and investments are called* Efficiency ratios Leverage ratios Liquidity ratios Profitability ratios Risk ratiosarrow_forward
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