PF4

Question 1

Basic Liquidity Ratio

Answer 1

Also known as the emergency fund ratio, the basic liquidity
ratio alerts you to whether you have adequate cash reserves to cover your monthly
expenses in the event of an emergency.

Question 2

Liquid Assets to Net Worth Ratio

Answer 2

• This ratio measures the percentage of your total
  assets that are cash (or cash equivalents).

Question 3

Debt to Asset Ratio

Answer 3

This ratio indicates how much of your assets are funded by
debt and helps you understand if you have borrowed more than you should

Question 3

Savings Ratio

Answer 3

How much of your monthly income that you channel towards
savings is determined by this ratio.

Question 4

Total Debt Serving Ratio

Answer 4

This ratio calculates the amount of your salary that is
used for your regular debt settlements.

Question 5

Net Invested Assets to Net Worth Ratio

Answer 5

This ratio lets you know how much of your
assets are effectively used to accumulate wealth for you for the long-term.

Question 6

The Solvency Ratio

Answer 6

The solvency ratio is calculated to gauge your risk of getting bankrupt due to the
inability to settle the debts taken.