The Parker family would like your help in revising their financial plan.  Review The Parker family financial and personal information before answering the following questions.


  1. Using the January 2017 asset and liability information, develop a balance sheet for The Parker family. Regular expenditures for things like utilities, rent, etc. are included on a balance sheet only if there are unpaid bills due.  Assume the Parker family has no unpaid bills.  Assets on a balance sheet are listed at their current market value, not the purchase price.  Liabilities are listed at the current outstanding balance. What is the Parker family net worth?



  1. Using the income and expenditure information for 2016, complete a cash flow statement for the Parker family. Date this statement January through December of 2016.  Use the “cash flow” concept for this financial statement including all money inflows as income and all outflows as expenditures. This is not a monthly cash flow statement, but for the entire year.


The distinction between fixed and variable income and expenses is open to interpretation.  You will not be graded on this distinction.  Try to differentiate, but be sure to total your entries for each row in the third column of the cash flow statement.


Did the Parker family have a cash surplus or a cash deficit in 2016?  What impact would the 2016 cash surplus (deficit) have on the January 1, 2017 balance sheet?



  1. Based on the Parker family financial statements constructed in questions 1 and 2, calculate the following ratios:
  • Liquidity ratio
  • Asset-to-Debt Ratio
  • Debt Service-to-Income Ratio
  • Debt Payments-to-Disposable Income Ratio
  • Investment Assets-to-Total Assets Ratio


See your textbook for guidance on what to include when calculating the financial ratios.



  1. Based on the information in the original case and in the financial statements, list at least 4 positive and 4 negative aspects of the Parker family current financial position.


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