Faith Brooks, a 28-year-old college graduate, never took a personal finance class. She pays her bills on time, has managed to save a little in a mutual fund, and with the help of an inheritance managed a down payment on a condominium. But Faith worries about her financial situation. Given the following information, prepare Worksheet 4 and Worksheet 5. Using information from these statements, calculate the current ratio, savings ratio, monthly living expenses covered ratio, debt ratio, and long-term debt coverage ratio. Interpret these financial statements and ratios for Faith. Based on your assessment, what advice would you give Faith? In addition to the following list, Faith offers these explanations:
-All short-term and long-term liabilities are unpaid.
-"Other expenses, monthly" represents cash spent without a record.
-She charges all incidentals on her credit cards and pays the balances off monthly. The balances shown below represent her average monthly balances.
Visa bill - $355
Stocks $5,500
MasterCard bill - $245
Monthly paycheck, net $2,400
Annual medical expenes $264
Mortgage payment, monthly $530
Temple Mutual Fund $2,100
401 (k) retirement account $4,500
Car payment, monthly $265
Total monthly utilities $275
Savings account $2,300
Clothing expense, monthly $45
Checking account $825
Quarterly auto insurance (not due) $450
Inherited coin collection $3,250
Condominium $65,000
Food, monthly $225
Auto $9,000
Furnishings $5,500
Mortgage outstanding $50,000
Auto
Read more: Income Statement/Balance Sheet problem?
