You are the financial adviser to one of your clients, a single,40 yrs. old owner of a
Question:
You are the financial adviser to one of your clients, a single,40 yrs. old owner of a trucking/shipping company here in Calgary.Her trucking company is very profitable and the salary she paysherself has averaged $210,000 in each of the last three years.
Please examine the following information of that client:
Chequing accountbalance $ 1,105
Saving accountbalance 800
House 1,900,000
Income taxes owed togovernment 45,000
Household effects and personalitems 160,500
Automobiles (car, pickup trucks, motorcycles) 115,000
Tax-free savingsaccount 2,300
Visa cardbalance 2,100
Master cardbalance 545
Utility bills (gas, electricity, cable,etc.) 470
Mortgage 14,000
Question 1
Calculate the client’s net worth, by preparing a balance sheetin a way that is similar to what appears in Chapter2. (4 marks)
Question 2
Calculate the following ratios: Debt ratio and current ratio
Based on the net worth number that you calculated for the clientand the value of the ratios; tell us what kindof financial position would youconsider her to be in: strong, weak, average, and explain why youhave that opinion.
(Hint: compare the value of the ratios to the recommended ratiosvalues in the Financial PlanningCalculations table (Chapter 2, page64) (8marks)
Question 3
Do you think your client’s financial position should bedifferent from what it appears to be, on paper, as far as her NetWorth is involved?
Are there any things about the client’s net worth that do notseem to be consistent with other clients that you have, who makesimilar amounts of money, and have a similar amount of networth?
You should have a number of questions that you would like toexplore with your client, so that you might be in a position toprovide her with some financial or life-situationadvice. (8 marks)
Business Law The Ethical Global and E-Commerce Environment
ISBN: 978-0071317658
15th edition
Authors: Jane Mallor, James Barnes, Thomas Bowers, Arlen Langvardt