PFI/PFP 3321: Financial Ratios

Basic Liquidity Ratio

Formula Where to Look? What's Included? Benchmark
Monetary Assets Balance Sheet Total Liquid Assets
3-6 Months
Monthly Expenses Cash Flow Stmt Total Fixed & Variable Monthly Expenses

Asset to Debt Ratio

What's Included? (Not all items will be included, it's only based on
Formula Where to Look? what's on the Balance Sheet) Benchmark
Total Assets Balance Sheet Total Liquid, Real Estate, Personal, Investment Assets
>1
Total Liabilities Balance Sheet Total Current & Long-term Liabilities

Debt Service to Income Ratio

Formula
Annual Debt Repayments
Annual Gross Income
What's Included? (Not all items will be included, it's only based on
Where to Look? what's on the Cash Flow Stmt) Benchmark
Credit Cards, Medical Payments (long-term), Boat Loan, Mortgage
Cash Flow Stmt Payment, Rent Payment, Student Loans, Child Support 36%
Cash Flow Stmt Gross Salary, Interest Earned, Investment Earnings

Debt Payments to Disposable Income Ratio

What's Included? (Not all items will be included, it's only based on
Formula Where to Look? what's on the Cash Flow Stmt) Benchmark
Monthly Non-Mortgage Debt Credit Cards, Medical Payments (long-term), Boat Loan, Student Loan,
Repayments Cash Flow Stmt Child Support
15%
Monthly Disposable Income Cash Flow Stmt (Gross Income minus Federal Income Tax, State Income Tax, Social
Security, anything else that is taken out of your paycheck)

Investment Assets to Total Assets Ratio

What's Included? (Not all items will be included, it's only based on
Formula Where to Look? what's on the Balance Sheet) Benchmark
Total Investment Assets Balance Sheet Total Investment Assets Age 20s: 10%
Total Assets Balance Sheet Total Liquid, Real Estate, Personal, Investment Assets Age 30s: 11-30%
Age 40s: above 30%
Cash Flow Stmt or Balance Sheet is Monthly and need the Annual amount - multiply by 12 50% Higher is desirable
Cash Flow Stmt or Balance Sheet is Annually and need the Monthly amount - divide by 12