Part B:
Renée 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, Renée 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 Renée’s financial statements. What does your analysis reveal?
- Current ratio
- Debt ratio
- Liquidity Ratio
- Debt-payment ratio
o Assuming Renée pays her credit card interest monthly
o Assuming Renée pays her credit card interest and balances monthly