Chapter 3, Problem 1FPC

a

Summary Introduction

Case summary: HJ and BJ both are employed, decided to begin financial planning, they have determined fair market price of their tangible assets from various sources available and they have used ratio analyses. They also worked for reducing their budgetary estimates by using the information available.

Characters in the case: HJ and BJ.

Adequate Information: HJ’s earns salary of $4,080 per month and also receives $3,000 in interest and BJ earns salary of $6,400 per month expecting increase in rent for $100 a month. They have decided to begin financial planning and have to determine the fair market price of their tangible investments. They are required to use different tools of financial ratios to interpret financial statements. They have to established long term-goals. They did some calculations to determine how much they had to save for each goals and created financial statements, budgets and analysis. It is required to make specific recommendations how they can reduce budgetary estimates.

To determine: The way H and B determined the fair market prices of their tangible and investment assets.

Introduction:

Financial statements: It shows value of assets and liabilities of an individual or family as well as their income and expenditure. The two most useful statements are balance sheet and the cash-flow statement.

Financial ratios are mathematical calculations intended to simplify the process of assessing your financials and the progress of your financial conditions using financial statements, ratios act as tools to develop saving, spending, and credit use patterns according to your objectives.

b

Summary Introduction

Case summary: HJ and BJ both are employed, decided to begin financial planning, they have determined fair market price of their tangible assets from various sources available and they have used ratio analyses. They also worked for reducing their budgetary estimates by using the information available.

Characters in the case: HJ and BJ.

Adequate Information: HJ’s earns salary of $4,080 per month and also receives $3,000 in interest and BJ earns salary of $6,400 per month expecting increase in rent for $100 a month. They have decided to begin financial planning and have to determine the fair market price of their tangible investments. They are required to use different tools of financial ratios to interpret financial statements. They have to established long term-goals. They did some calculations to determine how much they had to save for each goals and created financial statements, budgets and analysis. It is required to make specific recommendations how they can reduce budgetary estimates.

To determine: Liquidity ratio, asset-to-debt ratio, debt-to-income ratio, debt payments-to-disposable income ratio, and investment assets-to-total assets ratio are to be calculated using data from the cash flow statement developed by H and B along with suggestion given by these ratio’s about the financial situation of H and B and whether H and B should incur more debt.

Introduction:

Financial statements: It shows value of assets and liabilities of an individual or family as well as their income and expenditure. The two most useful statements are balance sheet and the cash-flow statement.

Financial ratios are mathematical calculations intended to simplify the process of assessing your financials and the progress of your financial conditions using financial statements, ratios act as tools to develop saving, spending, and credit use patterns according to your objectives.

c

Summary Introduction

Case summary: HJ and BJ both are employed, decided to begin financial planning, they have determined fair market price of their tangible assets from various sources available and they have used ratio analyses. They also worked for reducing their budgetary estimates by using the information available.

Characters in the case: HJ and BJ.

Adequate Information: HJ’s earns salary of $4,080 per month and also receives $3,000 in interest and BJ earns salary of $6,400 per month expecting increase in rent for $100 a month. They have decided to begin financial planning and have to determine the fair market price of their tangible investments. They are required to use different tools of financial ratios to interpret financial statements. They have to established long term-goals. They did some calculations to determine how much they had to save for each goals and created financial statements, budgets and analysis. It is required to make specific recommendations how they can reduce budgetary estimates.

To discuss: The specific recommendations and the way they can reduce their budget estimates without drastically affecting their lifestyle.

Introduction:

Financial statements: It shows value of assets and liabilities of an individual or family as well as their income and expenditure. The two most useful statements are balance sheet and the cash-flow statement.

Financial ratios are mathematical calculations intended to simplify the process of assessing your financials and the progress of your financial conditions using financial statements, ratios act as tools to develop saving, spending, and credit use patterns according to your objectives.