Ali’s gross income is $50,000 a year. His employer withholds 30% to cover income taxes and other mandatory government deductions (e.g. EI). After expenses and other cash outflows, his annual surplus cash flow equals $5,000. He has $1,200 in a chequing account and $2,500 in a high interest savings account. His long-term liabilities equal $45,000 and non-liquid assets total $53,000. He carries a balance on his credit card of $3,300 every month. Identify the correct statements.
I. Ali’s net worth is $11,700.
II. Ali’s savings ratio is 14.29%.
III. Ali’s has $1.12 of current assets for each $1.00 of current liabilities.
IV. Ali’s liquidity ratio is 1.27.
V. Ali’s debt-to-asset ratio is less than 1.
Choose the correct statements:
a) I, II and III
b) II, III and V
c) I, IV and V
d) II, III and IV