Jacob’s monthly income is $2,800 and his monthly expenses total around $2,000. He has been contemplating how to use his about $800 surplus. He has the following financial records:

Cash in his bank account $560

Investment in a mutual fund which he can easily convert to cash $850

Car (valued at) $12,000

Household personal possessions $2,850

Credit card balances $1,250

Miscellaneous short term debts $520

Student loan balance $8,500

Balance on car loan $4,500

Prepare balance sheet for Jacob.

Calculate current ratio, liquidity ratio and debt ratio. Comment on his financial position; does he live within his means?

What do you recommend Jacob to do with his monthly surplus income?

Answer rating: 100% (QA)

a Current Ratio is defined as the ration of Current Assets to Current Liabilities Current Assets are ... View the full answer