Part B:

Ren$$e St$.$ Clair is a $28-$year$-$old occupational therapist living in the Annex district of Toronto. She recently graduated from Algonquin College and now works as an independent contractor assessing the legitimacy of claims made by victims of car accidents. Like many students, Ren$$e accumulated a large student debt during her years at university and plans to pay it off within the next five years.

Cash Flow Statement

For the Year Just Ended

Income

Professional billings $$58,205$

Less: Professional expenses and taxes $(23,890)$

Professional income net of expenses and taxes $$34,315$

Dividends $($after taxes$)130$

Total Income $$34,445$

Fixed Expenses

Rent $9,600$

Student loan payments $5,800$

Total Fixed Expenses $$15,400$

Variable Expenses

Utilities, personal, food, clothing and dental $$12,785$

Moving expenses $225$

Credit card interest $1,010$

Recreation$/$entertainment $1,890$

Vacations $6,200$

Total Variable Expenses $$22,110$

Total Expenses $$37,510$

Surplus$/($Deficit$)($$ $3,065)$

Personal Balance Sheet

As of Today

Assets

Liquid Assets

Bank account $ $1,540$

Personal Possessions $$10,280$

Investment Assets

BCE shares $ $3,025$

Total Assets $$14,845$

Liabilities

Current Liabilities

Credit card balances $ $7,855$

Long$-$Term Liabilities

Student loan $20,580$

Total Liabilities $$28,435$

Net Worth $($$$13,590)$

Perform a ratio analysis of Ren$$e$$s financial statements. What does your analysis reveal?

$-$ Current ratio

$-$ Debt ratio

$-$ Liquidity Ratio

$-$ Debt$-$payment ratio

o Assuming Ren$$e pays her credit card interest monthly

o Assuming Ren$$e pays her credit card interest and balances monthly