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MissTica
3 years ago
12

Use the following balance sheet and cash flow statement information to answer the questions below. Liquid assets: $10,000; home

value: $210,000; monthly mortgage payment: $1300; investment assets: $90,000; personal property: $20,000; total assets: $330,000; short-term debt: $5500 ($250 a month); long-term term debt: $170,000 ($2100 a month); total debt: $175,500; monthly gross income: $9000; monthly disposable income: $6800; monthly expenses: $6000. Calculate the following. (please show work)
(a) Liquidity ratio
(b) Asset-to-debt ratio
(c) Debt service-to-income ratio
(d) Debt payments-to-disposable income ratio
Business
1 answer:
Ilya [14]3 years ago
4 0

Answer:

(a) Liquidity ratio  for individuals

basic liquidity ratio = cash assets / monthly expenses = $10,000 / $6,000 = 1.67

Depending on the maturity of the investment assets, the liquidity ratio could increase, but since the information is limited, we can only consider liquid assets. E.g. if the investment assets include bonds that mature in a very short term they should be included in this formula, but if they include bonds that mature in x number of years, then they aren't included.

(b) Asset-to-debt ratio :

generally the formula is debt to asset ratio = $175,500 / $330,000 = 0.53

but here we are asked to find asset to debt = $330,000 / $175,500 = 1.88

(c) Debt service-to-income ratio

debt service to income ratio = monthly payments / gross income = ($250 + $2,100) / $9,000 = $2,350 / $9,000 = 0.26

(d) Debt payments-to-disposable income ratio

debt payments to disposable income ratio = monthly payments / disposable income = ($250 + $2,100) / $6,800 = $2,350 / $6,800 = 0.35

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3 years ago
Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The Governmental Pro
8_murik_8 [283]

Answer:

c) $28,200

Explanation:

The computation of the net operating income is as follows

Total segment margin is

= $41,300 + $93,700

= $135,000

And, the common fixed expenses is $106,800

So, the net operating income is

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= $135,000 - $106,800

= $28,200

Hence, the net operating income is $28,200

Therefore the correct option is c.

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2 years ago
Closing entries transfer the balances of all temporary accounts (revenues, expenses, and dividends) to the Common Stock account.
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Answer:

False

Explanation:

False because the income, expenses accounts are closed to profit and loss account or income summary.

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3 0
3 years ago
Your friend Harold is trying to decide whether to buy or lease his next vehicle. He has gathered information about each option b
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Answer :

Net present value = -$30,284.90

Net present value = -$15,699.78

Explanation :

As per the data given in the question,

Particulars                 Amount     Factor              Purchase

Cost of new vehicle -$33,500    1                    -$33,500.00

Annual Maintenance -$1,200   3.605             -$4,326.00

Less : Salvage value    $13,300 0.567              $7,541.10

Net Present value                                             -$30,284.90

Particulars                  Amount       Factor           Purchase

Cost of new vehicle       $0                1                      $-

Annual Maintenance -$4,355       3.605          -$15,699.78

Less : Salvage value        $0             0.567              $-

Net Present value                                               -$15,699.78

We simply multiplied the amount with the factor so that the purchase amount could come

5 0
3 years ago
What is interest earned on bonds called?
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They are called fix income securities 
8 0
3 years ago
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