Documente Academic
Documente Profesional
Documente Cultură
PERSONAL FINANCIAL
STATEMENTS and
BUDGETS
2
Agenda
The interlocking
network of
financial plans
and statements
Personal Financial
Statements:
Personal Balance Sheet
Personal
Personal Income and
Financial Expense Statement
Statements Ratio Analysis
Cash Budget and Budget
Control Schedule
3
Financial Plans and
STATEMENTS
How personal financial statements help in personal
financial planning
4
Personal Financial Planning Facilitates
Financial Security
Greater Wealth
5
LO1
Roadmaps that
show you the
way.
7
LO2
Liabilities
(What you owe)
Assets
(What you own) How
much are
you
worth
today?
Investments
9
Assets: Things You Own (contd)
Real Property
No
Personal Property expectation of
future returns.
10
Liabilities: Money You Owe
Current or Short-Term
Long-Term
11
Net Worth: Measure of Your
Financial Worth
Net Worth =
Total Assets Total Liabilities
Solvent
sufficient assets to cover financial obligations
Insolvent
insufficient assets to cover financial obligations
12
How to Increase Net Worth?
Earn more
Spend less
Save more
Invest more
13
Personal
Balance
Sheet
Example
14
Personal
Income and Expense
Statement
Total Income
- Total Expenses
Tax Payments
Asset Purchases
Other Payments
17
Expenses: Cash Out
Fixed Variable
Contractual, pre- Amounts change from
determined, equal one period to the next
payments Credit card, food,
Rent or mortgage, clothing,
insurance, cable TV entertainment
payments payments
18
Personal
Income
and
Expense
Statement
Example
19
Using Your
Personal Financial Statements
Prepare financial
statements periodically
20
Tracking Financial Progress
Ratio Analysis
Balance Sheet Ratios
Solvency Ratio
Liquidity Ratio
21
Balance sheet ratio:
Solvency Ratio
Shows net worth at a given time.
Indicates potential to withstand financial problems.
Cash surplus
Income after taxes
Savings Ratio should > 10%
Budgets
Short-term financial planning
report that helps you achieve
short-term financial goals.
26
Using Budgets
Monitor and control finances
Finalizing
Estimating Estimating
the cash
income expenses
budget
28
Dealing with Deficits
Increase income.
Increase
29
Deficit Spending Results In
Liabilities
Assets
Net Worth
30
Cash
Budget
Example
Worksheet 2.3,
page 61 of
Personal
Financial
Planning 13th
edition by Gitman,
Joehnk, and
Billingsley
(Cengage
Learning, 2014).
31
Using Your Budgets
Budget Control Schedule
compares actual figures with various budget
Tool categories and shows variances.
32
Budget
Control
Schedule
Example
Worksheet
2.4, page 66
of Personal
Financial
Planning 13th
edition by
Gitman,
Joehnk, and
Billingsley
(Cengage
Learning,
2014).
33