Question

Meredith saves $575 a month and her gross income is $6,500 each month. Meredith’s liquid assets are equal to $4,000 and her current liabilities are equal to $1,200. Her net worth is $65,000. What is Meredith’s savings ratio?

Answer 1

Answer:

$8.85%

Explanation:

Savings refers to the amount of income that has been spent but has. The saving ratio measures the propensity of individuals to save. The savings ratio is derived by dividing individuals or household savings with disposable income.

Disposable income refers to the income after tax deductions.

Saving ratio =savings/ disposable income x 100

For Merideth: monthly savings = $575

gross income: $6500

No information on tax is given

Saving ratio = $575/$0.6500 x 100

=$0.0884 X 100

=$8.8461%

=$8.85%