Hasan Fareed, a 24-year-old college graduate, never took a personal finance class. He pays his bills on time, has managed to save a little in an investment account, and with the help of an inheritance managed to buy a condominium. Hasan worries about his financial situation. Given the following information:
1- prepare a personal cash flow statement
2- personal balance sheet
3- calculate the current ratio, liquidity ratio, debt-to-assets ratio associated with Hasan's
personal financial statements. Interpret these ratios for Hasan.
In addition to the list of monthly expenses, assets, and liabilities below, Hasan offers this information:
All utility bills for the month are unpaid, and therefore appear as a current liability (phone, cable, electricity, natural gas, water/sewer).
Auto and mortgage payments have been paid for the month; note that he lists "mortgage outstanding" and "auto loan outstanding" to indicate the outstanding amount remaining to pay off each loan.
"Other expenses, monthly" represents cash spent without a record to verify where.
Hasan charges everything on his credit cards and pays the balances off monthly. Credit card
bills represent his average monthly balance.
Semi-annual auto insurance premium payment is due this month.
List of monthly expenses, assets, and liabilities:
Visa bill
Stocks
MasterCard bill
Monthly paycheque, net Mortgage payment, monthly Phone bill
Cable bill
Investment account (bank) RRSP
Car payment, monthly Electricity bill
Natural gas bill
$1355 Water and sewer bill 5500 Savings account
645 Chequing account
4700 Auto insurance, semi-annual 1030 Residence
$ 50 3100 1825
450 265 000 425 42 Auto 9000 1800 Furnishings 5500
85 Food, monthly
4500 Mortgage outstanding 435 Auto loan outstanding
60 Other personal property 70 Other expenses, monthly
202 000 4225 1800 350
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