Tim and Autumn Davis are trying to figure out their current financial health. They will pay off their car loan in three years, their gross household income is $5,700 per month, and they receive $95 per month in interest income from their investments. They have listed the following items from their most recent statements. They have approximately $48,000 of expenses every year.
Savings account: $3,200
Checking account: $1,800
Credit card balance: $3,000
Car loan balance: $18,000
Car market value: $15,000
Furniture market value: $4,000
Stocks and bonds: $15,000
1) What is their current net worth?
- A) $21,000
- B) $39,000
- C) $18,000
- D) -$21,000
2) Assuming that they have no current bills other than those that are listed, what is their current ratio?
- A) 0.79 times
- B) 1.67 times
- C) 2 times
- D) Not enough information available
3) What is their debt ratio?
- A) 123 times
- B) 3 times
- C) 1.23 times
- D) 0.54 times
4) What is their approximate month’s living expenses covered ratio?
- A) 2.50 months
- B) 1.25 months
- C) 0.50 months
- D) 3.50 months
- E) Not enough information to answer this question
