Homework Answers
Solution
(1) Solvency Ratio = Total Net Worth / Total Assets
Where, Total Net Worth = $3474
and, Total Assets = $9925
Therefore, Solvency Ratio = 3474 / 9925 = 35.003% (Approx.)
(2) Liquidity Ratio = Total Liquid Assets / Total Monthly Loan
Payments
Where, Total Liquid Assets = $496
and, Total Monthly Loan Payments = $296
Therefore, Liquidity Ratio = 496 / 296 = 167.568% (Approx.)
(3) Savings Ratio = Total Cash Surplus / Income After
Taxes
Where, Total Cash Surplus = $149.6667
and, Income After Taxes = $1227
Therefore, Savings Ratio = 149.6667 / 1227 = 12.198% (Approx.)
(4) Debt Service Ratio = Total Current Debt / Income After
Taxes
Where, Total Current Debt = $2481
and, Income After Taxes = $1227
Therefore, Debt Service Ratio = 2481 / 1227 = 202.200% (Approx.)
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