Formula

Question 1

Housing expense (PITI)

Answer 1

no more than 28% of gross income

Question 2

Total monthly debt

Answer 2

No more than 36% of gross income

Question 3

Consumer debt

Answer 3

No more than 20% of net income

Question 4

Current ratio

Answer 4

Liquidity ratio,

Current assets/current liabilities

Current assets:
Cash equivalents, marketable secures , account receivable, inventory

Current liabilities:
Cash owed, account payable, credit card debt, taxes payable
( no student loan or mortgage should be included)

Note: use credit card debt even if the credit cards are paid off monthly.
Only use taxes payable when the material indicates the taxes are due or the material actually says the taxes are payable.
Only use mortgage information when the data tells you the “current amount “ of the mortgage due

Question 5

Calculation of gain in installment sale

Answer 5

Gross profit percentage = profit/total contract price

Gain= Installment * gross profit percentage