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STATEMENT OF FINANCIAL POSITION
Ike and Rhonda Sumrall
Balance Sheet
As of December 31 last year
| ASSETS | | LIABILITIES & NET WORTH | |
| | | | |
| Cash and cash equivalents | | Liabilities | |
| Cash | 500 | Credit Card balance VISA | 9,000 |
| Savings Account | 11,000 | Credit Card balance M/C | 0 |
| Total Cash and Equivalents | 11,500 | Student Loan-Ike | 45,061 |
| | | Auto Loan-Rhonda | 14,796 |
| Invested Assets | | Furniture Loan | 1,533 |
| Fed. Exp. Stock (100 Shares) | 5,000 | Total Liabilities | 70,390 |
| K&B Stock (100 Shares) | 7,200 | | |
| Growth Mutual Fund | 13,900 | | |
| 401(k) Account | 1,500 | Net Worth | 9,954 |
| Total Invested Assets | 27,600 | | |
| | | | |
| Use Assets | | | |
| Auto-Rhonda | 18,494 | | |
| Truck-Ike | 4,000 | | |
| Motorcycle- Rhonda | 1,000 | | |
| Personal Property & Furniture | 17,750 | | |
| Total Use Assets | $ 41,244 | | . |
| Total Assets | $ 80,344 | Total Liabilities & Net Worth | $ 80,344 |
STATEMENT OF CASH FLOWS
Ike and Rhonda Sumrall
Statement of Cash Flows (Expected to be similar this year)
January 1 December 31 last year
| CASH INFLOWS | | |
| Salaries | | |
| Ike Salary | 96,000 | |
| Rhonda Salary | 26,000 | |
| Investment Income* | 1,090 | |
| Total Inflows | | $ 123,090 |
| | | |
| CASH OUTFLOWS | | |
| Savings House down payment | 4,800 | |
| Reinvestment of Investment Income | 1,090 | |
| 401(k) Contribution | 2,880 | |
| Total Savings | | $ 8,770 |
| | | |
| FIXED OUTFLOWS | | |
| Child Support | 11,100 | |
| Life Insurance Payment (To Trustee) | 2,100 | |
| Rent | 24,000 | |
| Renters Insurance | 480 | |
| Utilities | 2,720 | |
| Telephone | 2,360 | |
| Auto Payment P&I | 3,600 | |
| Auto Insurance | 3,300 | |
| Gas, Oil, Maintenance | 2,400 | |
| Student Loans | 3,600 | |
| Credit Card Debt | 1,800 | |
| Furniture payments | 1,302 | |
| Total Fixed Outflows | | $ 58,762 |
| | | |
| VARIABLE OUTFLOWS | | |
| Taxes-Ike FICA | 7,344 | |
| Taxes-Rhonda FICA | 1,989 | |
| Taxes-Federal Tax Withheld | 20,316 | |
| Food | 3,600 | |
| Clothing | 3,000 | |
| Entertainment/Vacation | 18,500 | |
| Total Variable Outflows | | 54,749 |
| Total Cash Outflows | | 122,281 |
| Discretionary Cash Flows (negative) | | 809 |
| TOTAL CASH OUTFLOWS | | $ 123,090 |
* $340 from dividends and $750 from other investment sources.
Please answer questions
1. After reading the case, what additional information would you request from the Sumralls to complete your data-gathering phase?
2. Calculate the following financial ratios for the Sumralls.
| Calculation | | Good or Bad? |
| | Liquid Assets Monthly Expenses | |
| | Liquid Assets Current Debt Payments | |
| | Net Worth Total Assets | |
| | Total Debt Total Assets | |
| | Total Debt Annual Gross Income* | |
| | Annual Housing & Debt Payments Annual Gross Income | |
| | Annual Housing Costs Annual Gross Income | |
| | Investment Assets Annual Gross Income | |
| | Annual Savings Annual Gross Income | |
* Annual Total Income used in text is the same as gross income.
Other Comments:
3. Comment on any of the above ratios that you think are important.
Answer & Explanation
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