Question

In: Finance

Joanne has provided you with her net worth statement and has told you her monthly net...

Joanne has provided you with her net worth statement and has told you her monthly net income is $5,000 and monthly expenses are $3,800.

Assets:

Chequing account $7,200

Non-registered money market fund $15,000 (emergency savings)

TFSA Account $69,500 (savings for down payment on a home)

Car $20,000

Liabilities:

Credit card debt $1,000

Student loan $41,000

Using the information she provided you, calculate her liquidity ratio. Your answer should be a whole number, to two decimal places.

Solutions

Expert Solution

Liquidity ratio shows how many months expenses can be beared from cash Assets if there is no income.

Liquidity ratio formula = Cash assets/Monthly expenses

Cash assets is Assets that is readily convertible in cash.

Chequing Account and non registered money market fund (emergency savings) is liquid assets or cash assets because these are readily convertible in cash.

Cash Assets=7200+15000

=22200

Liquidity ratio = 22200/3800

=5.842105263

So liquidity ratio is 5.84


Related Solutions

Joanne asks you whether the outgoings listed below are allowable deductions. Joanne recently completed her medical...
Joanne asks you whether the outgoings listed below are allowable deductions. Joanne recently completed her medical degree and took up employment in Newcastle Base hospital. The following outgoings were incurred by her during the 2018-2019 income year: 1.   Travelling to Newcastle for the job interview $300; 2.   Moving from her home in Canberra to relocate to Newcastle $3,000; 3.   Purchase of compulsory doctors’ whites uniform to wear at work $600; 4.   Child care expenses for her two-year-old daughter $15,000; 5.  ...
Lara has been told by her boss Phyllis to maximize her potentialat her job as...
Lara has been told by her boss Phyllis to maximize her potential at her job as an accountant. Lara tries really hard during the week, but is a bit confused at her weekly meeting with her boss when Phyllis says that Lara could have done better. This example best represents:A. Goal difficultyB. Lack of goal specificityC. Lack of feedbackD. Lack of goal commitment
All of the following are uses of the Statement of Net Worth except:      It provides...
All of the following are uses of the Statement of Net Worth except:      It provides a way of measuring progress in meeting the family’s goals.     A detailed list of assets shows what you can draw on if you run into financial difficulty.      The list and value of your assets show what you have to manage.     The Net Worth helps you monitor the build-up of your assets.
a. How is net worth calculated? b. What is the meaning of the statement that your...
a. How is net worth calculated? b. What is the meaning of the statement that your net worth is the equity you have in your own life?
Zhi Ruo's net worth is $50, 000. her debt ratio is 0.5. her long term assests...
Zhi Ruo's net worth is $50, 000. her debt ratio is 0.5. her long term assests total $90,000 and monthly expenses are $5000. what is her liquidity ratio?
Anne Smith had a $5,500,000 net worth at the time of her death in December 2018....
Anne Smith had a $5,500,000 net worth at the time of her death in December 2018. In addition, she had a $250,000 whole life policy with a $40,000 of accumulated cash value; her niece was designated as the beneficiary. She also had a $150,000 pension plan death benefit. Calculations: 1. What was the value of Anne’s gross estate? 2. How much of her estate is taxable? 3. How much estate tax will need to be paid? 4. How much of...
Discuss the following situation: Your marketing manager has just told you she plans to dismiss her...
Discuss the following situation: Your marketing manager has just told you she plans to dismiss her administrative assistant for nonperformance and needs help designing a severance package. The administrative assistant was with the organization for two-and-a-half years and his current salary is $35,670. What would you suggest he be offered and why?
Vaughn has a net worth of $2,500. If Vaughn has a total of $2,000 of liquid...
Vaughn has a net worth of $2,500. If Vaughn has a total of $2,000 of liquid assets, $4,000 of personal possessions, and student loans totaling $2,500, how much does she owe on her credit card bills? Assume that Vaughn has no other assets or liabilities. The Schaeffer family wants to increase their savings ratio next year. Their current savings ratio is 5%. If the family makes a combined income of $60,000, and they want their savings ratio to be 10%...
r supervisor has provided you with the following draft statement of income: Smoking’ Hot Ltd. Statement...
r supervisor has provided you with the following draft statement of income: Smoking’ Hot Ltd. Statement of Income Year Ended October 31, 2020 Sales $76,445,500 Gain on sale of building 975,000 77,420,500 Expenses    Cost of goods sold 48,542,900    Depreciation 660,100    Interest 93,200    Other operating 313,700    Rent 1,800,000    Salaries and wages 8,452,900 59,862,800 Income before income taxes 17,557,700 Income tax expense 5,267,000 Net income $12,290,700 Your supervisor has asked you to INDICATE whether the statement of income was prepared in the...
1. Liz has recently been diagnosed with hypertension and told to cut back on her dietary...
1. Liz has recently been diagnosed with hypertension and told to cut back on her dietary sodium. Explain how sodium affects blood pressure and provide practical suggestions that would help Liz reduce her sodium intake. In your response, consider the guidelines in the DASH (Dietary Approach to Stop Hypertension) diet. 2. Define the terms “free radical” and “antioxidant”. Explain how free radicals are formed in the human body and how antioxidant nutrients function in decreasing human disease.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT