Question

Financial statement ratios play an important role in understanding and interpreting financial data. The solvency, liquidity, savings, and debt service ratios are important tools that will provide you with information, helping you chart and improve your personal financial planning. Complete the equations for each of the following financial statement ratios.

a. Solvancy ratio
b. Liquidity Ratio
c. Savings Ratio
d. Debit service Ratio

Answer 1

Note: The full question is attached as picture below

Solvency Ratio = Total Net Worth / Total Assets

Solvency Ratio = 2,896/8,275

Solvency Ratio = 0.3499698

Solvency Ratio = 35.00%

Liquidity Ratio = Total Liquid Assets / Total Current Debts

Liquidity Ratio = 414/2,069

Liquidity Ratio = 0.20009667

Liquidity Ratio = 20.01%

Savings Ratio = Cash Surplus / Income After Taxes

Savings Ratio = 163.6667/1,342

Savings Ratio = 0.121957303

Savings Ratio = 12.20%

Debt Service Ratio = Total Monthly Payments / Monthly Gross Income

Debt Service Ratio = 295/1636.6667

Debt Service Ratio = 0.180244396

Debt Service Ratio = 18.02%