Question

Maria and Jon Sanchez have just completed their third annual set of financial statements. They met in a personal finance class at State University and still remember their instructor's advice regarding the importance of knowing their financial condition and progress. Even before they got married, they decided that each year on February 2 (Groundhog Day) they would update their income and expense statement and their balance sheet. The following information is taken from their latest financial statements:
Monetary assets $4,060
Tangible assets $35,800
Investment assets $15,005
Short-term liabilities $3,690
Long-term liabilities $27,350
Annual gross income $48,000
Annual take-home income $35,000
Annual expenses (including taxes and debt repayment) $46,800
Annual debt repayment $8,700
1. Calculate Maria and John's current net worth?
2. Refer to above information Calculate Maria and John's surplus (loss) for the year.
3. Refer to aboe information What is Maria and John's asset-to-debt ratio?
4. Refer to above information Calculate Maria and John's investment assets-to- total assets ratio.

Answer 1

Answer:

1. Maria and John Net Worth

Total assets

Monetary assets        4,060  

Tangible assets         35,800  

Investment assets     15,005

                                  54,865

Total liabilities

Short term liabilities   3,690

long term liabilities    27,350

                                    31,040

Net Worth = Total asset - Total liability

Net Worth = 54865 - 31040

Net Worth = $23,825

2. Maria and John Surplus for the year = Annual Gross Income - Annual expenses  

= 48000 - 46800

= $1200

3. Assets to debt ratio = Assets / Debt

Assets = 54,865; Debt=31040

= 54,865 / 31,040

= 1.77

 

4. Investment assets to Total assets ratio

Investment assets = 15005; Total assets = 54865

=15,005 / 54,865

= 0.27