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Net Worth: the difference between your total assets, and your total liabilities.
Assets: things that you own that are worth something.
Liabilities: what you owe
Assets:
Liquid Assets: assets that can easily be converted to cash
Semiliquid assets:
assets that can be converted to cash, but not immediately.
usually some type of long term investment.
NonLiquid assets:
assets that can not readily be converted to cash.
usually some type of property that must be sold in some manner
Liabilities: what you owe
Shortterm debt
should be paid off within a 12 month period
typically credit cards, and small loans
Longterm debt
debt used to finance longterm investments like real estate, or major personal assets like your residence.
Sheenqui goes to her financial advisor to find out how her net worth looks. She gives her advisor the following information:
she lives in a $210,000 home with a mortgage of $152,000.
she has $35,000 invested in RRSPs
she has $734 in her chequing account and owes $12,500 on her credit card.
she has a vehicle worth $15,000 but still owes $5,000.
***
*** DebtEquity Ratio should not exceed 50% of Net Worth.
Complete Assignment #5
And that's the end of the unit.