{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

05 Measuring Your Financial Health

05 Measuring Your Financial Health - Review Chapter 2 pt 1...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1/20/2010 1 Chapter 2: part 2 Measuring your financial health Review Chapter 2 pt. 1 | Balance sheet | Assets & Liabilities | Net Worth | Personal Income Statement | Income & Expenditures | Fair Market Value | Budget Using Ratios: A Financial Thermometer | Analyzes the raw data from your balance sheet and income statement to identify your financial strengths and weaknesses. | Allows you to answer the following questions…… Question 1: Do You Have Adequate Liquidity? | Liquidity : the relative ease and speed with which you can convert noncash assets into assets. Ratios | Ratios to determine whether or not you have enough monetary assets z (1) to pay for an unexpected large expense or z (2) to tide you over during periods of reduced or eliminated earnings. Liquidity ratios 1. Current ratio 2. Month’s living expenses covered ratio
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
1/20/2010 2 Current Ratio | monetary assets current liabilities | Shows whether you have enough liquid assets to cover expenses currently due. | Ratio greater than 2 recommended Monetary Assets: | Cash or other assets that can be easily liquidated | Examples -- cash, checking accounts, savings accounts Your Liabilities: What You Owe | Current liabilities are liabilities that must be paid-off within the next year.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.