FPQP FPQP Financial Statement Analysis

Question 1

Which personal financial statement shows a client's assets, liabilities, and net worth at a specific point in time?

Accepted Answer

Balance sheet (net worth statement)

Answer

Income statement

Answer

Cash flow statement

Answer

Statement of changes in equity

Question 2

A client's net worth is calculated as:

Accepted Answer

Total assets minus total liabilities

Answer

Total income minus total expenses

Answer

Total savings minus total debt payments

Answer

Gross income minus taxes

Question 3

Which ratio measures how well a client can cover short-term obligations with liquid assets?

Accepted Answer

Liquidity ratio

Answer

Debt-to-income ratio

Answer

Savings rate

Answer

Investment assets to net worth ratio

Question 4

On a personal balance sheet, a client's home mortgage would be classified as:

Accepted Answer

A long-term liability

Answer

A current asset

Answer

A current liability

Answer

An investment asset

Question 5

A client has $80,000 in liquid assets and monthly living expenses of $4,000. What is their liquidity ratio?

Accepted Answer

20 months

Answer

10 months

Answer

15 months

Answer

25 months

Question 6

Which of the following is classified as a liquid asset on a personal balance sheet?

Accepted Answer

Checking account balance

Answer

Primary residence

Answer

401(k) account balance

Answer

Collectibles