Question

please use Tables 3.2 and 3.3 in the book on pages 82 and 86 respectively.

Please calculate Hernandez's basic liquidity ratio.

Table 3-3 Cash Flow Statement for a Couple with Two Children-Victor and Maria Hernandez, January 1-December 31, 2018 Dollars Percent 53,000 32,000 1,800 1,000 200 7.720 95,720 55.4% 33.4% 1.9% 1.0% 0.2% 8.1% 100.0% INCOME Victor's gross salary Maria's gross salary Interest and dividends Bonus Tax refunds Net rental income Total Income EXPENDITURES Fixed Expenses Mortgage loan payments Real estate taxes Homeowner's insurance Automobile loan payments Automobile insurance and registration Life insurance premiums Medical insurance (employee portion) Emergency fund savings Revolving savings fund Federal income taxes State income taxes City income taxes Social Security taxes Personal property taxes Retirement IRAS Total Fixed Expenses Variable Expenses Food Utilities Gasoline and maintenance Medical expenses Medicines Clothing and upkeep Church Gifts Personal allowances Children's allowances Miscellaneous Total Variable Expenses Total Expenses SURPLUS (DEFICIT) 14,400 4,800 1,200 6,000 2,100 1,200 2,800 2,400 1,800 10,000 2,600 600 6,500 1,020 6,000 $63,420 15.0% 5.0% 1.3% 6.3% 2.2% 1.3% 2.9% 2.5% 1.9% 10,4% 2.7% 0.6% 6.8% 1.1% 6.39 66.3% 7,000 3,600 4,200 3,400 1.750 1.950 2,400 1,400 3,000 3,200 7.3% 3.8% 4.4% 3.6% 1.8% 2.0% 2.5% 1.5% 3.1% 3.3% 0.496 33.7% 100.0% 0.0% 400 $32,300 $95,720 $ 0

Answer 1

Answer :-

BASIC LIQUIDITY RATIO = LIQUID ASSETS / CURRENT LIABILITY

LIQUID ASSETS = CASH IN HAND = $ 1200

SAVINGS ACCOUNT = $ 4200

VICTOR'S CHECKING ACCOUNT = $ 2700

MARIYA'S CHEKING ACCOUNT = $ 3300

TAX REFUND DUE = $ 700

RENT RECEIVABLE = $ 650

TOTAL LIQUID ASSETS = $ 12750

CURRENT LIABILITY = DENTIST BILL DUE = $ 220

CREDIT CARD DEBT = $ 1600

TOTAL CURRENT LIABILITY = $ 1820

BASIC LIQUID RATIO = 12750 / 1820 = 7 :1