Business, 30.03.2021 05:00 freesiareal2780

Category Amount Debt Payment (with mortgage): $1,800 per month
Debt Payment (without mortgage): $750 per month
Expenses: $2,600 per month
Income - Gross: $4,800 per month
Income - Disposable: $3,700 per month
Monetary Assets: $15,000
Total Assets: $75,000
Total Debt: $55,000
Total Net Worth: $20,000

Respond to the following using the above information

1. Determine if your friend has enough money to pay for emergencies by answering the following related to the Liquidity Ratio:
A: Describe the purpose of this ratio.
B: Indicate which of the items from the above table that you will use to compute this ratio and which report that each item originated from (i. e. budget and/or balance sheet).
C: Calculate this ratio by showing all of your work.
D: Assuming that it would be desirable to fund at least 3-6 months of living expenses in the event of an emergency, does your friend have enough money available to meet this goal?

2. Determine if your friend is paying too much for non-mortgage debt by answering the following related to the Debt Payments-to-Disposable Income Ratio:
A: Describe the purpose of this ratio.
B: Indicate which of the items from the above table that you will use to compute this ratio and which report that each item originated from (i. e. budget and/or balance sheet).
C: Calculate this ratio by showing all of your work.
D: Assuming that a ratio of 14% or lower is preferred by creditors, is your friend spending too much on their non-mortgage debt?

Answers: 2

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Category Amount Debt Payment (with mortgage): $1,800 per month
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