Exam 2: Measuring Your Financial Health and Making a Plan

If your liabilities are greater than the value of your assets you are considered

How would an income statement help you create a financial plan?

Items on the balance sheet that represent amounts owed to others are termed

From the Keown book,you have learned that a budget

George and Betty George and Betty, a middle-aged couple, have watched their savings account dwindle over the years. They both make good incomes and can't understand why they aren't saving more each month. Below is their financial information to complete an income statement. Gross monthly income: $8,000 Income taxes withheld monthly: $2,300 Monthly interest income from investments: $100 Monthly insurance payments: $700 Monthly housing expenses: $4,500 Monthly food expenses: $800 Miscellaneous expenses: $400 -What is George and Betty's net income?

Why is the balance sheet a useful tool?

The first section of a balance sheet represents your

To calculate your net worth,subtract your total debt from your total assets.

A physical asset such as a high-definition,flat-screen TV or a Harley Davidson motorcycle is called a(n)

Hector and Maria Montez Hector and Maria Montez are trying to figure out their financial health. They will pay off their car loan in three years, their gross household income is $3,800 per month, and they receive $75 per month in interest income from their investments. They have listed the following items from their most recent statements. Savings account: $1,200 Checking account: $800 Credit card balance: $1,000 Car loan balance: $12,000 Car market value: $8,000 Furniture; market value: $2,000 Stocks and bonds: $10,000 -What is their current net worth?

Your financial situation is insolvent when

Explain the relationship between the debt ratio and insolvency?

Hector and Maria Montez Hector and Maria Montez are trying to figure out their financial health. They will pay off their car loan in three years, their gross household income is $3,800 per month, and they receive $75 per month in interest income from their investments. They have listed the following items from their most recent statements. Savings account: $1,200 Checking account: $800 Credit card balance: $1,000 Car loan balance: $12,000 Car market value: $8,000 Furniture; market value: $2,000 Stocks and bonds: $10,000 -What is their month's living expenses covered ratio?

Before you can hope to achieve your financial goals,you will need to first measure your current financial health and develop a plan and a budget.

According the Keown book,which Web-based personal financial planning website is known as "the best free way to manage your money?"

Practical uses of an income statement include

Prepare a list of questions to ask a prospective financial planner you are considering.

A financial ratio by itself is of little value.To what can you compare your financial ratios to make them valuable financial planning tools?

An expenditure over which you have no control and are obligated to make is a

________ planners charge a fee that is reduced by the amount of the commissions they earn.