Q1

Determining the right amount of short term, liquid investments. Ella and Aaron Martin together earn approximately $92,000 a year after taxes. Through an inheritance and some wise investing, they also have an investment portfolio with a value of almost $200,000.

A. How much of their annual income do you recommend the Martins hold in some form of liquid savings as reserves? Explain.

B. How much of their investment portfolio do you recommend they hold in savings and other short term investment vehicles? Explain.

C. How much, in total, should they hold in short term liquid assets?

Q2

Abbott Ltd, a supplier of sailing equipment was incorporated 10 years ago and is 60% owned by Xavier Ltd. Abbott Ltd has been a very successful business, averaging annual profit of $5 million. However, during the past two years the company has run into financial difficulties and has defaulted on its loan with Westpac bank. Consequently, the bank has used the powers in loan agreement to monitor the company's activities closely to obtain repayment of its debt. The company must now obtain the bank's authorization for any expenditure over $5,000 and no changes in operations of the company are permitted, without the bank's approval.

Does Westpac bank have control over Abbott Ltd? Justify your response with reference toAASB3 'Business combinations'.

Answer rating: 100% (QA)

Q1 A How much of their annual income do you recommend the Martins hold in some form of liquid savings as reserves Explain Its generally recommended to ... View the full answer